Wow, big news about RB’s $40MM online video buy! For those of you who don’t know, RB is the manufacturer of products like Lysol, Woolite, and Clearasil (says AdAge).  The bigger news here – far bigger than the fact that they’re spending $40MM in online video – is the fact that they’re “demanding” $2 CPMs.  This demand was so low that YouTube originally sat out the buy.  Think about that. YouTube, where the majority of videos are still at the quality level of people jumping off their house onto a trampoline, wouldn’t even dip this low.  So why is demanding this CPM such a big story?  Nope, not because it’s going to set a new industry standard.  Not because RB will help single-handedly drive down the cost of online video.  It’s because it shows that despite the vast and rich quantities of available online metrics, most marketers are still using traditional media tactics to negotiate and purchase their media – all their media – including online.

It’s funny.  Articles continue to pop up about the inability to truly measure online video because we can’t convert it backward 50 years to the TRP metric.  Yet, with TV you can’t measure how much of the spot someone watched, whether they clicked a companion banner, whether they converted to an action later based on a click or an impression, interacted with the video if it allowed such a thing, and the list really goes on.  With all of these advanced metrics, and don’t forget brand studies, RB is going to spend $40MM in online video and it appears that their primary goal here is to pay a certain CPM.  Why does the CPM even matter if they have certain interaction goals or even brand goals? What if paying $6 instead of $2 yielded 4x the interaction or 4x the lift in ‘intent to try the product’ from a brand study?  Moreover, what if their biggest competitor used this strategy while RB celebrated its 3x less CPMs and 4x less effective metrics?

My experience with these types of buys is that CPM is the big focus up front, but once the buy starts it must perform to metrics that often weren’t discussed before the buy began.  Wouldn’t it make for a more harmonious relationship between client, agency, and publisher, if everyone was on the same page before and after the buy started? More than I’ve had to realize recently, the online community still has quite an uphill battle ahead of itself to convince marketers that, online is not only its own animal and shouldn’t need to withstand an attempt to shoehorn old thinking into a new more robustly-measured medium, but to be used to its fullest will require embracing the advanced metrics that can drive real learning and real performance when done right.

The RB buy is a big win for the online video community, but it could have been bigger had it been approached with online thinking and objectives.

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So someone tells you they’re going to change the web.  They’re going to index Twitter, make it searchable and sell paid search placements around it.  Nice thoughts but with something like 49 out of 50 startups failing, do they have a chance?  With Bill Gross, the man who, for all intents and purposes, invented search engine marketing, is the guy behind this new venture – it looks better than 50/50.

TechCrunch covered the news yesterday.  The site is still in very early format, but the questions around this new platform are more far reaching than just the site or service itself.  For instance, this gives publishers the ability to monetize it’s Twitter feeds but automatically starts them out at a 50/50 rev share split, relegating them to the land of adsense and unsold inventory prices.  Sure, the prices may start out high, but just like mobile used to be unavailable under $20 but now can be purchased much more inexpensively, these prices too will self-regulate once the novelty wears off.

Second, Google didn’t come up with this. Surely they’re watching closely and surely they wouldn’t hesitate to acquire this company or whichever company ends up succeeding in this space. But would the FCC let that go through?  The “Google monopoly” label is floating around in many corners right now and this might be a deal that tips the scale.  Next, if TweetUp can do it, why can’t someone else wait, watch what mistakes are made, and roll out a copycat version with all the fixes?  This is a proven trend in Silicon Valley – anyone remember AltaVista, Friendster, Palm PDAs (BlackBerry and Apple currently own this slot) and Tivo?

This will be one to watch closely, but more important to watch will be what flaws advertisers and their agencies experience, and whether other startups form to patch those flaws for TweetUp, or instead choose to launch their own service and compete.

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ClickZ just published results from an NAI study saying that BT ads cost more than double that of non-BT ads.  $4.12 CPM vs. a $1.98 CPM to be exact.  They also showed conversion rates being more than double.  However, there is more behind this story doesn’t tell than it does.  Here’s a deeper look.

First, let’s first start at the $1.98 CPM.  Unfortunately this average includes all the $.25 inventory currently being resold over and over on the you-know-what-exchange-I’m-talking-about. Even if you’re a brand advertiser with direct response goals, it’s unlikely inventory sold to you at $1.98 is what you really want. Simultaneously it’s important to know that true quality publishers (premium as defined by some) don’t sell their unsold inventory for much less than $2.  The message here is if you are seeing a site list with a ton of great sites but paying $2, you are most likely not running any reasonable amount of impressions on those great sites.  Thankfully, companies like DoubleVerify and Adometry have become part of the network scene and can provide advertisers a clearer view into what is really occurring so they can make sound decisions on different price points within a network.

As for the $4.12 average BT price, this appears to be more in line with the value advertisers should expect to receive.  Most quality BT will be priced higher, but at a $4.12 CPM you are probably at the very least getting real BT.  Advertisers should be cautious about purchasing BT in the $2 or $3 dollar range.  The cost of cookie stamps can be at or over $2.  Even in-house BT data has a price, and while it may be lower, the internal costs to administer those relationships factor in such that at least $1.50 wouldn’t be out of range.  Then add good inventory nearing $2, and either the seller is acting as a non-profit or they’re delivering a mix of BT and non-BT but selling it as 100% BT. This is hard to check since companies like Adometry and DoubleVerify have not launched products enabling BT verification as of yet but you can be sure it will come. When this does happen we’ll likely see the average price of BT, as reported here, rise a bit as companies will have to fully comply.

Traditional media is all about getting the lowest rate for a highest valued desired position. Online media works that way for guaranteed inventory but with more than 50% of all display being sold through non-guaranteed positions, it works in the opposite way. Because the inventory is on an auction system, higher-priced bidding actually secures better inventory.  Consider this as you “negotiate hard” with vendors. Acquiring your inventory at a value-oriented price is good so long as the value doesn’t appear so good that the reality is that the quality of the inventory is no longer desirable.

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