Online media doesn’t offer as much value to advertisers as it can and should.

Despite some superficial comparisons, it doesn’t offer up as much value as other media, either. Media sellers have tried to get us to rely on impressions as the key metric in an industry where impressions are less likely to represent real audience exposure. That’s one problem. To make matters worse, sellers overprice impressions relative to supply and demand.

Sellers believe that too many impressions are out there. “Too much inventory” has become the their mantra.

Buyers, on the other hand, complain that impressions are an inadequate measure of the audience figures they need. Media buyer and fellow ClickZ contributor Jim Meskauskas said recently, “We never mean to buy impressions in other media. We buy audience. In a medium like print, circulation figures represent audience much better than impressions do online.”

Given the problems faced by buyers and sellers, a simple answer may exist. We need to move from CPM (cost-per-thousand) pricing to CPMM (cost-per-million) pricing.


Sellers complain of excess inventory yet remain reluctant to reduce the CPM price. This reluctance may have been an appropriate attitude back when the Internet served up tens of millions of impressions each month. Now, we serve billions a month — 8 billion, to be precise.

The average CPM price has declined over the past two years. Where we used to spend $25, we might now find ourselves paying $8. Still, the quantity of unsold inventory is overwhelming compared to paid advertising spots.

Roughly calculated, given monthly inventory figures and the $8 billion we plow into online marketing each year, the cost of the average impression — were each and every one to be sold — would be approximately $0.08 CPM.

Sellers prefer to ignore this reality. They shouldn’t. Inventory levels won’t decrease. Sure, spending will rise over time, but inventory will likely outstrip that growth. The solution? Solve the advertisers’ “value” issues by providing them many more impressions for their dollar. We should be pricing online impressions by the million — the CPMM.

The average impression sells for an $80 CPMM if you account for all unused media. If sellers were to offer advertisers this deal, they would be better leveraged to break into the budgets of competitive media, such as TV and print. The issue of delivering audience would become relatively insignificant in the face of an onslaught of exposure. Expensive banner serving would go by the board and some auditing hurdles would be need to be leaped, but it could be done.

We have value in the online media industry now. The sellers have formed a culture that encourages the withholding of that value. It’s analogous to selling ocean water for $10 a bottle, complaining the market isn’t spending enough… and then bemoaning “too much supply.”

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