Good marketers are always fascinated with why and how things happen. Media folks in particular are not only infatuated with how consumers buy, surf, and consume across multiple media, we’re also obsessed with how those media are bought.
Buying methodology is as much an art as it is a science. We all know online has altered the rules of the media game in tectonic ways (I won’t bother listing these, as we’re all familiar with them). Yet despite unparalleled growth, online is still subject to the law of supply and demand, as well as natural price inflation, just like any other traded commodity.
With changing consumer multi-channel surfing and multi-media consumption behaviors, there seems to be a growing concern about whether online media (despite its fledgling status compared to its offline next-of-kin) should evolve its buying methods before it repeats its offline counterparts’ history and become complacent. So I started thinking; to accommodate consumers’ complex behavior movements across the Web, what if advertisers could purchase CPU (cost-per-unique user) instead of impressions and clicks?
Buying CPU (But Not For A PC)
In technology, CPU refers to a computer’s “central processing unit.” The CPU I’m referring to isn’t related to PCs. It’s a media-buying model.
In many respects, online buying methods have shifted away from prevalent CPM (define) and CPC (define) to, CPA and hybrid models. Whether CPA refers to cost-per-action or cost-per-acquisition (of customers, leads, etc.), most savvy online advertisers are and should be familiar with the CPA cost structure. Most current buying models focus on immediate return of the marketing investment. More often than not, they limit the communication window with the target audience to a single action: to buy or not to buy; or to click or not to click.
If publishers can accurately quantify and manage their audience (in essence, delivering behavioral targeting’s promises), advertisers don’t need to stop at purchasing a target user’s single action (CPC, CPA, etc.). They could also start a longer-term relationship with a unique brand loyalist who has the potential to make multiple purchases over the next year, 10 years, and potentially a lifetime.
The Shift Towards LTV and Multi-Action Metric
In an increasingly competitive and complex economy, advertisers are no longer satisfied with one-time purchases or single-actions. Many of the clients I’ve worked with in the past year or so are looking beyond immediate sales results. They’re increasingly focused on LTV (lifetime value).
This means brands seek long-term engagements with their targets. They truly consider the total lifetime purchase potential and the fruits of brand loyalty more than ever before. Although we can’t currently buy media by CPU, this shift creates a great launch platform for such a structure, as it allows marketers to devise plans that are multi-variable based, and multi-metric assessed.
What Does This Mean For Online Media?
If you really think about it, media-buying methods have always mirrored the way a medium is consumed. Online is no exception; impressions (CPM), clicks (CPC), and CPA are all products of complex actions consumers take within the medium.
Although we’ve yet to cross 2005’s halfway mark, we’ve already seen CPM and CPC costs increase as much as 20 percent in Q1 as compared with same period a year earlier. This is, of course, largely attributed to an increased number of advertisers who recently became “digerati” and are now joining the brand-building and sales ROI gold rush.
Maybe CPU won’t adhere to the strict metrics many direct response advertisers require to calculate ROI. Maybe behavioral targeting should be purchased on a performance basis, using a CPA/CPU hybrid. Obviously a CPU discussion is, in many ways, somewhat idealistic and unrealistic at present. But if behavioral targeting is about effectively identifying and quantifying consumer behaviors and actions, why limit it only to the existing purchase models?
Digitalization of culture and society changed the way media is perceived and purchased. We must bear in mind the resolution cannot catch up with the revolution. When is it time to rethink online media so we don’t fall into the complacency trap that’s crippled our offline counterparts?
The answer: all the time.
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