Last week, I explained why we should get rid of the impression. Now let tell you what should replace it.
One problem that has always plagued the online media space is too much inventory (yes, there are certainly others, but this is one of the big ones).
There are two ways of dealing with this. Restrict inventory, thus creating greater demand, or price it lower, thus creating a deal too good to pass up. Right now, most prices for online advertising inventory do not correlate with perceived value. It’s Economics 101, folks. If I’ve got too many widgets, do I hold them in inventory in the hope that someone will want them for what I want to price them at, or do I price them to move?
Many buyers and sellers in this industry forget that the inventory we trade is perishable, not durable. We’re not buying and selling cars, pants, or silverware. Rather, it’s more like bananas, fish, or seats on an airplane. When the month is over and the impressions generated aren’t sold, they’re gone. Like in the airline industry, once that plane takes off, you can never sell that empty seat again.
I propose that buyers and sellers — advertisers and publishers — find a way to demonstrate the value of online media.
We have to start thinking differently about ad inventory and the vehicles that carry it. Not all sites can operate on the same principles. Yahoo‘s home page is a very different ad vehicle than Salon.com‘s content pages. One is like a billboard on the highway; the other is like an upscale magazine. The inventory should be packaged and sold in different ways.
For a property that behaves a lot like print (e.g., Salon.com, special-interest content sites, financial news and newspaper sites, etc.), online inventory should be sold much like print inventory, that is, a fixed position that exists on a page for the life of the issue. When I buy print, I pay a cost per thousand (CPM) derived from a guaranteed rate base — x number of unique individuals will have an opportunity to see my ad, in theory. If I buy placement on The Onion in the November 28 issue, the ad stays up for the week. The unit needs to be more interesting and arresting than a 468 x 60, but it also needs to be permanent. When I “turn the page” on an article, maybe there’s another advertiser there who has a fixed placement. CPMs for circulation can go up some, but the numbers of impressions become less of a focus and the problems of remnant inventory can go away.
Yes, impression CPMs will effectively go down, but that’s OK. If, as an advertiser, I buy space in an online publication and get more impressions for my dollar, the efficiency of that effective CPM is increased, and I will be more likely to buy in that publication again as a result.
I am not proposing something new or revolutionary in the realm of media. It is only new to online advertising.
Not only will dealing in this sort of “fixed position” currency eliminate much of the excess inventory problem that plagues the online media space, it will also set the stage for real audience-based measurement. Suddenly, GRPs, TRPs, reach, and frequency aren’t so hard to imagine for online advertising.
This will better allow sites to identify their audiences, make them more precisely targetable (excepting those already registering users), and package that audience for sale to advertisers looking for not just another media to supplement existing efforts in other media, but better media that can accomplish specific goals.
The idea is that we no longer buy and sell impressions in the interactive space. We don’t do it anywhere else, so let’s rid ourselves of it as the currency for online media. Instead, let’s relegate the impression to its place in traditional media: an efficiency evaluative, not units that I buy.
We’ve got to get away from dot-com bubble, venture-capitalist thinking: multiplying an imaginary CPM by the total number of page views a site generates and coming up with the treasures of avarice. It’s time to start thinking like media.
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