4 ms·

This is silly for a few reasons. For one, click through rate and conversion rates are not only a factor of the displaying website, they're a factor of the ad an

This is silly for a few reasons. For one, click through rate and conversion rates are not only a factor of the displaying website, they're a factor of the ad and where the click through lands. For a publisher CPC is therefore often impractical because they have no idea what that will convert to in terms of sheer dollars, given that a poor ad will produce far fewer clicks with the same audience than a good one. (And the distinction between the two is not always easy to tell without a/b testing.) With CPM you know exactly what you're going to get paid. As an advertiser, CPM is fine too because if you're at all competent and do some basic testing you can build an above-average engagement ad and effectively get a discount. If your ad produces 10% more clicks than everyone else, you can bid more to get the same ROI. This is often easier than you'd expect. I buy all of our Facebook ads via CPM because we've figured out some great ways to get higher click throughs, and roughly what CPMs you need to bid at what times for what demographics and keywords to max out your budget as efficiently as possible. Also, all advertising is basically CPA-by-proxy so it's not really that relevant to the advertiser whether they're paying by CPM, CPC, or CPA. When I buy an ad somewhere (as I frequently do) I may pay CPM, CPC, or CPA, but I'm simply converting them all into CPA in a spreadsheet because that's the way to get ROI which is the only thing I care about. If I have to spend 50 cents to make a buck, I'm ecstatic, but if I have to spend $1.50 I look elsewhere. If the publisher uses some shady page-view enhancing technique that doubles page views but doesn't impact clicks at all, that's fine. I just will end up paying half the CPM (or moving elsewhere) because that converts to the same CPA in the end. The market values ad slots in terms of pseudo-CPA, so the publisher can't really boost their revenue in the long run without boosting the advertisers'. All shifting from CPM to CPC or CPA really does is switch the party taking the risk from the advertiser to the publisher. It's pretty easy to see why publishers don't want to do that. Advertisers really don't want it anyway because it's harder to budget when you don't know how much you're going to be paying today.

jwesley 17y ago
Not all the benefits of advertising can be directly tracked from click to sale. If you buy a banner on TechCrunch and don't make your money back on direct sales but everyone interested in startups has heard of your product, that is not necessarily a loss. Also the author was not suggesting that we switch from CPM to CPC/CPA: "CPA and CPC have their appropriate time and place, but let’s recognize that those situations are limited." He is advocating the development of new advertising metrics that are more closely aligned with engagement and other marketing goals that have nothing to do with sheer impressions.
kleinsch 17y ago
You're right that everything is CPA by proxy. I work for an ad network, and despite selling on a CPM basis, we get evaluated on a CPC or CPA basis frequently. For performance campaigns, everything gets broken down to an eCPA for evaluation anyway. Major buyers usually do a small test campaign, look at the performance, then decide if they're going to do a larger campaign or reevaluate. The other example people keep bringing up is branding campaigns, which are a major source of spend online. I agree that for these there may be no measurable action, but that's not to say they're fine with any impressions. The major point for branding campaigns is that site lists, safety, and context matter so much more. If you're trying to do branding, you don't want your ad showing up next to pictures of keg stands or negative articles about your company. Brand campaigns want to be 100% sure that all content will be brand safe, so they only go to big sources they can trust. This is why most major branding campaigns have stringent restrictions, usually excluding all user generated content and long tail publishers. The big branding campaigns are paying $10-20 CPM, but they're buying it on NewYorkTimes.com and ESPN, not on your blog or social media invention.

jwesley 17y ago

Not all the benefits of advertising can be directly tracked from click to sale. If you buy a banner on TechCrunch and don't make your money back on direct sales but everyone interested in startups has heard of your product, that is not necessarily a loss. Also the author was not suggesting that we switch from CPM to CPC/CPA: "CPA and CPC have their appropriate time and place, but let’s recognize that those situations are limited." He is advocating the development of new advertising metrics that are more closely aligned with engagement and other marketing goals that have nothing to do with sheer impressions.

kleinsch 17y ago

You're right that everything is CPA by proxy. I work for an ad network, and despite selling on a CPM basis, we get evaluated on a CPC or CPA basis frequently. For performance campaigns, everything gets broken down to an eCPA for evaluation anyway. Major buyers usually do a small test campaign, look at the performance, then decide if they're going to do a larger campaign or reevaluate. The other example people keep bringing up is branding campaigns, which are a major source of spend online. I agree that for these there may be no measurable action, but that's not to say they're fine with any impressions. The major point for branding campaigns is that site lists, safety, and context matter so much more. If you're trying to do branding, you don't want your ad showing up next to pictures of keg stands or negative articles about your company. Brand campaigns want to be 100% sure that all content will be brand safe, so they only go to big sources they can trust. This is why most major branding campaigns have stringent restrictions, usually excluding all user generated content and long tail publishers. The big branding campaigns are paying $10-20 CPM, but they're buying it on NewYorkTimes.com and ESPN, not on your blog or social media invention.