Monday, April 28, 2008

CPM

CPM. The cost of 1,000 of just about anything…in our world the cost of 1,000 viewers/listeners/readers/experiencers… and a monetary metric that has been in use since the first thousand cave dwellers trooped by to look at the paintings…

And that is the point. It’s an old metric; a tired measurement.  Yet, it is one that is still used – even in digital channels where the implied promise of connection is up close and personal – not aggregated and public.

I recently participated in a roundtable, with a number of well funded Digital Start-Ups, where CPM was the key topic of discussion. Most of the companies were focused on analytics of one sort or another or delivery of content using analytics. Each professed to be able to make the user experience more intimate and more individual. To finally help fulfill the full, and so far not delivered, potential of the Internet and all of its digital siblings and offspring.

Also present was the “money” the majority share holders; the funders; the nurturers of promising start-ups with big exit potential.

The discussion was around CPM but it was around a fear that other metrics based on performance would supplant CPM and the concern was that it would limit their revenue and earnings; lower the valuations of their companies and make their exit strategies one day less lucrative.

I pulled out my soapbox and my megaphone and began to wail on them!

CPM? More justification for the useless term “EYEBALLS” that investors created at the beginning of the boom (and some still use) to justify ridiculous valuations and stupid amounts of money paid to companies that have been long gone and forgotten – and to some that are still here and have yet to pay out…

CPM? As bad as cost per-click-through or cost-per-view, other measurements that can be manipulated as sites know how to drive user or create funnels of travel that force inflated and meaningless traffic by and through meaningless pages of irrelevant content.

And, no matter how hard I pushed – and I pushed – the crowd was on the side of numbers for building revenue, i.e., pay-out for the deal

That said, there were a few people who passionately talked about transactions.  And read transaction as whatever final action your engagement is looking to consummate. It could be a sale; a download; a sign up. It could be getting someone to share with a friend or agree to a face to face visit. It could be signing up for a credit card or booking a test drive or buying a burger. But it isn’t based on CPM.

What really got me – or brought me to the “AHA” moment if you like – was the notion that this crowd of Generation Internet began talking about branding and looked at in isolation.  A few even (shudder; shudder; shudder) used the term above the line and below the line (more shuddering).

Yet they are selling analytics tools or systems that are designed to bring the message home to create the relevance of personalization that just doesn’t lead to or induce sales – or merely create a positive atmosphere for a sale. Rather, it allows a “sale” (transaction) on the spot and in a context that is relevant and brand powerful in a way that CPM based messaging cannot be,

And that lead me to this thought.

We say we are about conversations – impactful conversations – right? Yet what really separates us from advertising agencies (many of which now believe they need to be in the business of analytics; ROI and measurement as we are)?

Then it struck me:

Most conversations are simply monologues delivered in the presence of witnesses.
- Margaret Millar

CPM:  a monologue delivered in the presence of witnesses. If ever there was a filter by which we can judge our work and its relevance to what we say we do, here it is.

By the way,I think we can apply this to our own personal behavior as well.  It makes a great and humbling filter…

So, conversations or monologues with big audiences, CPM or something else…

You tell me…

Posted by David on 04/28 at 08:59 AM
(21) Comments • Permalink

  1. To me, it's about Cost Per Positive Interaction with the brand.

    Posted by Nevena  on  2008-04-28 15:12:23

  2. Oh, I don't know... Why discount the value of non-targeted communications? In order to have a meaningful one-to-one dialogue, you need to identify your participants. Non-targeted communications are the very top of the funnel. You can learn a great deal about your marketing by exposing it to broad audiences. You can identify people you didn't know would be interested in your marketing, get baseline information about an unknown audience, and start trending behavioral patterns of sites and other online properties. All necessary intelligence for doing a proper targeted marketing campaign. Like anything else, non-targeted, CPM model advertising is critical to what we do. Where I believe we come in is where we say "If you're going to run out there with a broad campaign, let us find out as much as we can about whom you hit, the audience to whom you're addressing, and something about the media/place in which you're engaging...so that way we can properly (and effectively) address the people who show interest." People shouldn't confuse proper targeted marketing with broadreach marketing...and you might argue that the CPM model doesn't apply to targeted marketing...but there's a place in the toolbox for each technique, provided you know when to use each of your tools.

    Posted by Glenn White  on  2008-04-28 19:05:30

  3. I think that is the point -- CPM is for broad based targeting where the ineraction is not diretc but part of a cumulative effect. It is a very importnat and useful metric for what it does and yes is part of eh tool box

    Posted by david  on  2008-04-28 19:28:07

  4. CPM is like high school SAT results. They’re both easy to measure and compare, but not necessarily connected to whether the student will actually fulfill his real-world potential. However, basing advertising fees solely on transactions (CPA) has its own serious flaws. You’ve placed the guarantee of payment for the use of your resources into the hands of a third party. Now, the advertiser may WANT to sell his product, but that doesn’t mean he CAN sell his product. Ultimately, a happy client will come back for more (OK, admittedly and presumably based on reaching some predefined expectations on transactions). Nevertheless, with affiliate marketing models the brokers and sites take all the risk on what is ultimately the advertiser’s ability to close, and not necessarily related to your own performance - assuming you’re bringing them the appropriate audiences in the first place. Now, if transaction measurements were used to lock in advertisers to additional campaigns and campaign extensions - that would be an interesting and effective use of that tool.

    Posted by Stephen Leavitt  on  2008-04-28 19:39:03

  5. "CPM because" that's how the campaign objectives were set up. Marketing Directors mostly do set up objectives this way, and it's a valid way to compare similar kinds of campaigns (especially with "day to day" thinking). My favorite strategic metrics include increments from activity: eg, inferring ROI using changes to NPV, brand equity changes (selling more for same $s because the brand can do it now) and brand(s) value changes, but these happen too slowly to attribute to a single campaign. As metrics they are also hard to do with accuracy (with good data) and impossible with crap data. But, for tactical metrics, cost per ('000) response and cost per ('000) conversion are immediately telling you a valid story. They also let you know where the roadbumps are. However, client need to keep awareness beyond the immediate and do something systematic to measure brand dimensions, to know where any new sales are coming from (competitor, cannibalisation, or new consumer), and to understand reach by channel (and interactions between channels, etc) so the client doesn't narrow their "conversation" to the cheap, narrow and loyal niches. Tom.

    Posted by Tom Osborn  on  2008-04-29 03:26:41

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