MediaMedia PlanningCPMs Are Falling Down, Falling Down, Falling Down

CPMs Are Falling Down, Falling Down, Falling Down

The first quarter of the year has always been a soft one for advertising, even long before the Internet. CPMs are still coming down, and Jim tells you how to negotiate the best deal.

Forget the London Bridge, kiddies. Chicken Little, don’t worry about the sky. Fund managers, don’t sweat the indexes. Well, OK, be concerned about those. But folks, it is CPMs that are really falling. Yes, it’s true. CPMs are still coming down, particularly during this first quarter of the real 21st century.

The first quarter of the year has always been a soft one for advertising. Long before the Internet, print, television, and most other media have always experienced a lull in activity. Many clients could never get their acts together in time, budgets for the new year weren’t finalized, or the advertiser was still hung-over from the spending binge of the previous fourth quarter. I always told clients who were not affected by seasonality that if they were interested in running spot television during the first quarter, they should buy it starting in January because they could get rates that were sometimes more than 50 percent off of those quoted in Spot Quotations and Data (SQAD).

There is no reason to expect anything different from the web. Though I would posit that this particular first quarter is being subjected to market forces beyond just seasonality, the result is a depressed marketplace with lots of inventory and bargains galore!

Here are some of the CPM ranges certain kinds of inventory can be purchased at.

Keywords. This inventory can still command the highest premium, as it is the most in demand, the most subject to supply restriction, and usually the best performing. But costs vary widely. You can expect to pay as low as a $15 CPM if it is what I like to call “inert” inventory. That basically means it’s remnant, not moving, and gathering dust. High-end CPMs, such as what you’ll find on a directory like Yahoo, are still going to be somewhere close to $60 gross. The average, though, seems to be sitting at around $40.

When negotiating with search engines and directories on a keyword buy, however, be sure to watch for inclusions of superfluous words. If you want certain phrases and submit them as part of your RFP, remember that some search engines and directories can’t accommodate them. They will instead slip in the single-word components of the phrase and give you that.

Networks. These are nice and cheap these days, as well they should be. Run-of-network (RON) inventory should always be inexpensive. The idea of costly, untargeted inventory is absurd. Most networks can be purchased for between a $3 and $10 CPM. Often the CPM will be tied to a certain size of the buy, but it usually isn’t unreasonable. DoubleClick, on the other hand, still asks for a $15 CPM for RON on its rate card, which is way out of the market range. I can get a lower CPM buying People magazine. DoubleClick’s Sonar Network, however, is much more reasonable at around $6, and it performs very well.

When buying this stuff, pretend you do not speak “rate-cardese.” Look at the reps quizzically, and shrug your shoulders. None of the inventory most of these guys are holding is selling out, and you, as the buyer, are negotiating from a position of strength.

Content sites. The most wiggle room is among content properties. Just as the target audiences for content sites vary widely, so too can content sites’ CPMs. What I can tell you is that the average CPM for most of these sites is not the $33.64 quoted in AdKnowledge’s Q3 2000 “Online Advertising Report.” It’s more like half that. Sure, tech sites will be more expensive, but the CPMs simply follow the degree of targeting. I’m seeing $12 to $17 CPMs for a lot of content sites and even lower for the midtier selections.

Again, ignore rate cards, and never take the first offer. These folks will negotiate, I promise.

So buyers can take significant advantage of a soft market during a traditionally slow time of year, but more philosophical questions will start being asked. For example: “What will the long-term effects be?” “As we are still in the phase of creating a market, are we adding ingredients that will always keep prices depressed?” “Will good businesses go under because of it?”

My answer is, “No, some old-economy rules still apply.” If demand catches up with supply, costs will rise, just like always. But in the meantime, buyers, go forth and get some good deals!

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