Let's Kill The CPM (Advertising Model)

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.

For what it's worth, much of my income comes from the CPM model yet.. I agree with this piece, but it flies in the face of the "Chinese Wall" ethic (between editorial and advertising) in the publishing world.

I run a popular(ish) programming blog that sells advertising. I suspect that a very healthy CPA would encourage me to provide a better service to readers and advertisers alike as I'd need to ensure the way the advertising is integrated is appealing and useful (otherwise I don't earn anything). But some readers (and many journalists) would scream at the falling of the advertising/editorial barrier, even if I tried to remain as ethical as possible (disclosure, etc).

killing CPM will pretty much kill the content providers. People are more or less ignoring ads at this point, so the CTRs and CPAs are tanking.

Let's say you have 500,000 users, and each gets 10 ad impressions a month. Let's be honest, 500,000 users is a LOT, that's more people coming to see your site, than most local broadcast stations, yet they really don't make you that much money.

That's 5,000,000 views, at CPM of $2, that's $10,000 a month.

If we used that same 5,000,000 and switched to CPC, we'd get a CTR of about .1%. So that 5,000,000 views would net us 5,000 clicks. Let's be generous, and say each click is worth 50 cents. Bam, you only made $2,500. So your income has just been cut in 4. And that $2,500 will twindle since ads don't really change, so a user will only click them once.

If we used the same 5,000,000 views as CPA, the result will be even worse. People just don't like pulling out a credit card(at least not without checking other sites for a better deal). If your CPA is 1 action per 25,000 views, and you get $10 for each transaction, that's $2,000 worth of revenue. Bam your original $10K has been cut in 5. And remember, you'll need to find brand new offers every month, since the ads will get stale.

With an income of $10K/mo, you can focus entirely on your content, but with only $2,000-$2,500 you have to go pick up a 2nd job.

This proposal is probably a good idea for big sites like CNET, since that would kill all the smaller content providers and drive them out of business.

I'm going to have to kindly disagree with this.

Some people don't seem to understand that advertising is also about brand awareness. I've seen that damn "evony" or "ebony" or whatever it is free mmorpg ad all over the place, but have never clicked on it.

I'm sure that, eventually, I will check it out. This isn't because of ONE website that I have seen the ad on, it is because I have seen it everywhere.

The value (at least in some cases) is in LOTS of impressions. The CPM model will probably never die (and IMHO, this is a good thing).

Digital marketers in Germany are saying exactly the opposite at the moment. CPA and CPC kill the advertising market. They say. Media agencies flat out don’t seem to believe that impressions are worth anything. The only look at conversions.

The marketers don’t like that. Firstly because that obviously makes them look bad (impressions >> conversions). Secondly because there is arguably something to a branding effect. Just displaying ads could realistically have an effect. And it seems pretty impossible to measure such an effect in many cases.

That whole discussion among German online marketers even leads to batshit crazy arguments (Well, one marketer. Any more and I would lose my faith in humanity.) about making display ads non-clickable.

Does anyone think that more relevant or interesting ads are a good solution?

I agree that CPM is broke. People really don't like ads, as evidenced by the popularity of AdBlocker. Paying to show people a lot of something that they hate doesn't make a lot of sense.

CPM is the right approach for a branding campaign. If you're trying to generate sales leads then, obviously, CPL (cost per lead) would make more sense for you.

yeah, let's kill the CPM, and smoke dope. What is your proposal, dude?