Friday, May 16, 2008

Go Granular: Monetizing the online experience

With vast shifts of advertising money into online channels, a question arises: CPM or PayPerClick?

An interesting study at PubMatic shows that CPM values are dropping as of late...At least among the largest websites. And though one month isn;t a trend, the discrepancy between the value of large and small CPM values is noteworthy.

It makes sense of course...CPM's are built on the idea of 'a thousand sets of eyeballs' (do pirates count as one or two eyeballs I wonder?). And yet online, we find that our most granular interests are precisely what we can eyeball at a time (LongTail anyone?).

So as marketers, we can recomend display ads tied to behavioral algorithms associated with web visits. But the largest websites will, by definition, require that our algorithms about relevance be built on equally large guesses about what browsing behavior actually correlates to...paying for such guesses is one model. Paying for a click that 'proves' the accuracy of the guess is another.

The smallest websites, who appear to be maintaining their CPM rates may yet be held accountable to the same standard. For now, they would appear to be capturing the attention of advertisers, perhaps on the premise that they are a more intrinsically relevant place for the people who are to be found there.

Accenture produced a study graphic showing where advertisers expect their money to go in the next five years: Paying for performance arises to overtake the CPM model.

For a captivating look at musical money try the classic:

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