What's The Buzz?

Editor’s note: What’s happening on the always-active industry discussion lists? What’s got people riled? What’s the buzz? John Day tells all in week two of a weekly column that digests the major threads on two leading online ad industry discussion lists: the Internet Advertising Discussion List (IADL) with moderator Adam Boettiger and Richard Hoy’s Online-Advertising list .

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More shots were fired in the ongoing war between cost-per-click versus cost-per-thousand last week. The issue has been slumbering for a while, at least in the online discussion lists, and last week the encampments began to stir.

The most recent battle on the I-Advertising list has the potential to last for months. David Doggett’s “modest proposal” kicked things off last week.

David’s a confirmed cost-per-thousand (CPM) guy who wonders why any publisher would knuckle under to a CPC deal. If a site has a 1 percent click-through rate, then 99 percent of the traffic it has worked so hard to attract is worthless.

His “modest proposal”? If you only want to pay per-click, you can’t put your company name or your logo on your banner. Got a problem with that? No money, no branding. “A single-tiered pricing scheme for the Internet is not logically based, although it may be greed-based,” he says. “There is value to page impressions.”

It isn’t that 99 percent of the hypothetical site’s traffic is worthless, I-Advertising Moderator Adam Boettiger responded, it’s simply that the publisher has “chosen” to sell through a CPC model rather than a CPM model because he or she figured CPC would be more profitable.

And, yes, advertisers would have a problem with David’s no-name/logo proposal. Some, in fact, will design a banner for high branding but poor click-through, then buy on a CPC basis. To protect themselves, publishers need a guaranteed click-through rate clause that allows them to kill a campaign that doesn’t hit a certain level.

Leo Sheiner and Muhammad Lee carried flags in the CPC versus CPM debate. Leo contended that CPM deals are great and that many of the publishers he deals with prefer them, but returns on well-targeted sites are higher with CPC or CPA (cost-per-acquisition).

Muhammad is unconvinced, and contends that CPC shifts the burden of generating results from the advertiser to the publisher. “If no one shows up, so what? They can always find another publisher to take on a CPC campaign.”

It takes repetition to get a message across, he adds, and the “inherent flaw” in the CPC model is that “an advertiser’s creative is shown several times but the advertiser perceives no value in impressions that do not garner a response.”

Adam steps between the two of them, posing a brain-teaser. He asks which of three alternative buys is best, then says it’s impossible to know without understanding the advertiser’s objectives.

“Let’s move away from debating which model is better and more toward what’s being projected for the next few years — decrease in banner usage and increase in sponsored content and other methods of advertising online,” he writes.

Nobody’s putting a gun to a publisher’s head to make him or her take CPC deals. If a site isn’t selling its inventory at CPM, Adam suggests, there’s likely a reason. It could be supply and demand, or something lacking in the site’s content, or its audience, or the site’s not being sold aggressively enough….

Enough of that for now.

How about a few more tidbits from eMarketer’s report, due this week? In 1998, the top 10 web sites pulled in 72 percent of all online ad dollars, this year they’re projected to have 74 percent. Web banners currently account for 52 percent of all ad dollars spent online, but their share is expected to shrink to 26 percent by 2001, while sponsorships will take 58 percent.

US companies spent $1.5 billion last year advertising on the Internet. The European ad market was only $132 million, 9 percent of the US total.

At Online-Ads last week, the ubiquitous Leo Sheiner got a fan letter from Jim Reardon. In an earlier episode, Leo had touted his firm’s ability to look after the interests of both advertisers and publishers.

“I had to suppress a giggle” when I read this,” Jim writes. “I find it amusing that you claim to have the interests of either your advertisers or your host sites, when you simply refuse to do anything to help them.” Presenting a litany of specific complaints, Jim concludes, “I challenge you to show me ONE thing you’ve gone out of your way to do to assist a host site.”

“There will always be a few dyed-in-the-wool malcontents like yourself,” Leo roared back. “We do not claim to be perfect. We just do our best,” he added. “I am not complacent, but I am reasonably content.”

And, he insists, he doesn’t condone fraud. We winced as the two continued to exchange blows.