So Apple announced its new gouging pricing for its iAd platform.  $10 CPM plus $2 per click, which could $30 CPM if the ad clicks even moderately well.  But the biggest news here isn’t the pricing for 1,000 impressions, but that it’s a one million dollar minimum commitment.  That’s a big chunk of change for most advertisers, and those CMOs who decide to make the leap will definitely be defining a point in their recent careers.  But, will it make these CMOs a star and launch them to greater fame and fortune, or will it be a career killer?  Let’s take a look.

Hyundai was mentioned as an early adopter.  They are certainly on a roll and are positioned to be a top-few automaker in the world by the end of the decade.  But are Apple device owners the right target to spend $1MM?  On one hand, I haven’t seen any research that shows these consumers are any more likely to purchase a new car, or more specifically an import or Hyundai, than any other device user.  For all we know, Blackberry Pearl users could be the perfect target.  On the flip side, Apple device owners surely aren’t any less likely than the average TV watcher, and car companies spend billions on (basically) untargeted TV advertising each year anyway.

So is this a bad use of money, or just questionable?  Other than the pricing being misguided, the CMO who decides to spend this $1MM+ will have to decide if there are future employers they’re hoping to work for.  With CMO tenure averaging only 18 months, they’ll likely soon be working somewhere else and if that company is a PR-driven company, this could be a great move for them.  I believe most of the value in this $1MM will be in the PR generated from it.  However, if it’s a very metrics-oriented company a CMO will be interviewing with next, the iAd pricing is too expensive to justify the near-term ROI.  It’s unfortunately $1MM of some company’s money will likely be spent to further one or a few people’s career, but at this point that’s what the iAd’s early adopters seems to be appealing to.

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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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I had the pleasure of speaking to a great group of music industry executives and promoters yesterday at Canadian Music Week in Toronto.  The panel I moderated was called “Data is King” and we were to speak about using data to enhance the understanding, targeting, and results of digital media.  The panelists included smart folks from Radian6, Nielsen, SkyTide and BigChampagne.  Before we went up on stage we were huddling and realized that there was a real possibility that many in the audience had a total annual marketing budget that would be smaller than the smallest one of our products.  So, I made this the first thing I asked when we got on stage and indeed, just five people in the audience had a marketing budget of more than $20,000.

Audible.  Green 33, speak about free. Hike.  First question for the panelists: What is the one free tool you would recommend that marketers on a very tight and limited budget be using today (and don’t say, “yeah, what he said.”)  I got four very good answers.

1. The first and most obvious is Google analytics.  Knowing where your visitors are coming from, search terms that drive them there, and the geography within which you’re most popular are all “must know” data and can be the start of a good foundation in a low budget marketing plan.
2. Next was TweetDeck, and what a great answer.  Bands have certainly embraced the power of social media and use facebook and twitter regularly, but monitoring what is being said about your band, business, or even your competitors can be done through TweetDeck’s search functions.  You get what you pay for in that TweetDeck lacks the ease of use and data arrangement paid tools will offer, but what a great start.
3. Next was compete.com.  You may know we’re a big advocate of Compete as well through our partnership with them, but their free product is also a great way to peer into basic web site analytics of other web sites.
4. Finally, Quantcast is a must-use.  It’s worth “Quantifying” your own site but the ability to see where else your audience visits frequently and information about your competitors’ sites will give you a leg up on less savvy marketers right away.

Sure, Omniture, Radian6, and CompetePRO are all much more robust but when you have $20k annually (or less) to market your brand, band, or product, every dollar has to go to media.  If you’re in this position, take comfort knowing there are plenty of free tools available to get you started on a great path.

P.S. A tremendous point was made by Eric from BigChampagne that didn’t fit into the body of this post but is worth mentioning.  Most data is now available free somehow or another.  When you hire a BigChampagne, Nielsen, or any other company, make sure you’re not spending money on the data itself but on the analysis and insight they can provide you.  Most of these companies have experts that can take data which would have otherwise taken your, or someone at your company, days or weeks to pour through and make sense of it immediately.  Now that’s worth the price.

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Sheesh, Tolman, you sure made some waves! The funny thing, though, is that waves are usually only made when someone puts an obvious truth out in the open that was previously unwilling to be discussed.  In this case, the media is crying that publishers are “getting squeezed” by all the other players in display space.  Why not look at it from an economics perspective, though?  The publishers aren’t getting squeezed; buyers are buying what they value.  What they value is the audience data, the ability to aggregate and optimize across hundreds or thousands of sites, and have it all delivered in one clean report.  Buyers apparently value this much more than whether their banner appears on people.com, perezhilton.com, or insertcelebrityraghere.com.  If they hit their eCPA, what’s the difference?

I believe this is simply the reality of the web catching up with those who have been trying to buy digital media for the last 15 years the same way they bought traditional media.  Because there haven’t been instantly measurable results in traditional media, content was king.  Now, results have dethroned the old regime and publishers are the ex-communicated.

Publishers will argue that this will lead to a world of all junk content.  I don’t see it that way.  I’m sure Perez doesn’t either.  What it will lead to is a broader base of lesser known brand name-based content, and not because consumers want these lesser-known brand names, but because these lesser-known brands will have a business model that can be profitable selling their display at significantly lower CPMs – rates buyers are willing to pay.

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Back in April I gave a presentation and the first question from the audience was, “What is the most significant trend in the next 12 months.”  Well, based on JEGI’s Tolman Geff’s presentation at the IAB, I got it right.  Data providers and aggregators have entered the mix and are a key part of the online value chain now in 2010.  Moreso, this data costs money but advertisers aren’t willing to pay higher CPMs, so other player’s margins are getting squeezed.

Nothing illustrated the importance of data like the slide where Tolman showed Burst on one side and Interclick on the other, Burst being an inventory aggregator and Interclick being an audience aggregator.  Burst, Tolman says, is valued at $200,000 and Interclick at $110MM.  I personally believe both valuations are a bit extreme, but point taken.  Focusing on audiences is the way of the future.  But hold on there.

Remember a few years ago when the notion of “premium” became a big deal within ad networks? Once it was out there, every ad network was more premium than the next, each touting wallstreetjournal.com through nameyobaby.com as premium sites.  Forget the site name, it’s premium!  But that passed.  Advertisers and agencies came to expect a certain level of quality, but rarely any more, at least in our meetings, “ooh” and “ahh” at certain sites being on a site list.  It seems this happens with everything that is a big deal at some point in online.  It’s huge and vital at the time, and then becomes a commodity.  This will happen for data too.  Any publisher or network not layering significant amounts of data into their inventory will perform so poorly they’ll be kicked off of clients’ ad buys.  12 months from now, this too will be ho-hum.

Now, back to that premium inventory.  Remember those few networks that got their hundreds of millions while it was hot?  If you’re in the data game, you might consider a note-to-self right about now.  What do you think?

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After multiple years of Starcom/comScore’s “Natural Born Clickers” study showing that clicks are coming from a smaller and smaller group of internet users – and a fairly defined demographic group at that – many clients still want CTR on their reports.  Here we’ll explore three easy ways to wean your client from the CTR metric for good.

1. Research proves the point.  The Starcom/comScore “Natural Born Clickers” study shows that 67% of all banner ad clicks online come from just 4% of the population.  Think about this.  If you have a .10% CTR and consider that a success, realize that 96% of your campaign really has a .033% CTR.  Most clients who are satisfied with the .10% CTR would not be happy at all with the .033% CTR, but that’s exactly what the very large majority of the online population is delivering.  To make it worse, 8% of all users deliver 85% of all clicks.  So now 92% of the population in this same campaign are clicking at a .015% CTR – terrible by most clients’ standards that care about CTR.
2. Bounced visitors isn’t anyone’s real goal.  Many clients have told us that they simply want to “drive traffic to their web site.”  This is rarely true since, when asked if it would be ok if the user clicked on the banner, got to the web site, and then hit the “back” button, most clients say that this is absolutely not ok.  (Wait so you DO want the user to do something on your site?!)  But let’s say for a minute this really is true.  It’s a pure branding play, and the bounced visitor is totally acceptable.  First, wouldn’t a brand study provide the real metrics you care about?  Second, is the demographic you want on your web site the demographic that is actually clicking?  Look at the demographics in the study and you’ll see it’s a fairly defined demographic, often women who are looking for sweepstakes.  Is that your audience?  The reality is that no one really wants a bounced visitor, and therefore working with your client to establish a real post-click/impression goal is advised.
3. Embrace evolution (at least as it relates to online metrics.)  The final and most obvious reason people pay attention to it is that it’s a legacy metric that was the first metric clients jumped on when online advertising started.  Much like the GRP/TRP in TV which is still in use 50 years later, old habits die hard.  If you are an advertiser it is incumbent upon you to learn best practices within the industry. Your agency and publisher partners will share in this process to the extent you invite them to the party, but only you can drive your own success in working with metrics that matter.

Simply sending the next campaign metrics report to your client without CTR is unlikely to win any points, but scheduling a separate discussion with your client specifically about goals, objectives, and the metrics that drive them will provide for a good forum to present these three tips here and begin to explore your online goals in more depth.

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A couple industry colleagues of mine have mentioned WIMI to me, the Wharton Interactive Media Initiative.  WIMI’s boiled-down (self-stated) goal is to better understand the effects of interactive media and to help monetize the interactive industry.  This sounds to me like a theoretically great but realistically impossible objective. Kinda like having a university initiative centered around solving world peace. It’s a good thought.

This recent article brings this point home.  Here is the first sentence of the article: “So what’s a website banner really worth?” I’ve heard this “issue” trying to be solved at multiple conferences too. Well, what would world peace be worth? Does anyone think they’re really going to come to one answer that everyone can agree on?  Frankly, such a grandiose question doesn’t have one answer and the industry is worse off for trying to simplify the thought process behind it.

To address their question, advertisers that only pay on a CPA might place a $.07 CPM value on the banner, no matter where the placement occurs.  Some luxury advertisers; however, pay up to $100 CPMs for the right sites.  As any good salesperson knows, the right price is the highest price a customer will pay while still being very happy with their decision.  Sometimes the buyer’s and seller’s ranges intersect, sometimes they don’t.

The head-scratcher here is this. All well-run businesses know exactly what their key financial metric and goal is.  For some it’s profit per square foot of retail space.  For some it’s profit per employee.  The point is, it’s different for all businesses and surely they teach this at Wharton! So, what’s that particular web site banner or search click worth to THAT specific advertiser? Do the math on conversions and profits and the answer is really quite simple.

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Demand-side platforms, or DSPs are becoming a buzzword lately, along with impression scoring and real-time bidding.  These three terms all point to platforms that allow an advertiser to procure its inventory “on the spot” without any waste.  This is very different from the many ad networks that pre-buy their inventory in bulk and parse out on the back-end.

Full disclosure here.  We are an ad network that does not pre-buy inventory.  We buy on demand as clients agree to work with us so that we can get the exact inventory that independent data says will fit their goals.  That said, firms like Invite Media and Media Math are now making news for similar functionality.  The gist is that whether buying through exchanges or through publishers directly, and pairing the latest behavioral data with that inventory, DSPs are able to acquire only the impressions that are the best fit for their advertisers’ needs while turning away any impressions that don’t make sense for clients on the roster at that time.  Many on the DSP side say that this method eliminates waste and improves metrics.

Networks that pre-buy, and most ad networks that have become popular in the last few years do so, acquire their inventory from their publisher list up front.  Sometimes it’s a quarter in advance, sometimes it’s a year in advance.  These networks and work to have a large and diverse enough client base such that they pre-purchased impressions are beneficial to each client. Left over inventory is either then resold to other networks, sold on an exchange, or blended into a client’s campaign, or simply burned.  Networks that pre-buy believe they have an advantage because they get first pick of inventory from popular sites.

The goal of this piece is not to tell you which is better, but hopefully to shed light on the difference.  Which is right for you?

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