Can someone put CPM out of its misery

From Digital Ministry full link here.  Some interesting comments as well.

CPM has been dragged kicking and screaming across from traditional offline media to online. It’s now our responsibility to put an end to the madness, and admit CPM just doesn’t work online. It’s been almost 15 years since I first experienced the Internet in a small windowless room at high school.

A group of friends and I crowded around a thirteen inch monitor and surfed (which is what you did back then) over to The Simpson’s Archive, somewhat surprised that the monochrome text was available from a distant, mystical land we’d never visited.

The passage of time since means that digital media is now seeing its second and third wave of custodians, and as such we’re fortunate to have the benefit of hindsight. The original band of online media monetisation professionals probably had no idea of the destruction they were going to wreak on this then new medium by dragging offline media metrics into the online world.

And so, with the benefit of that hindsight it’s time that we well realised that online CPM is taken out the back and shot. For some it’s going to be an emotional experience, just like the ending of Old Yeller was, but CPM in the context of the web, has gone rabid.

In fact, no, it’s far worse than that. CPM is evil, and it must die.

As an industry we’re all starting to realise that blogs aren’t newspapers 2.0, MP3s aren’t CD 2.0 and online video isn’t TV 2.0 – but we still focus on a method of monetisation that applies only to offline media. The problem with using the CPM metric online is that it applies to a world where constraints are physical. In a magazine, ad pages are a scarce commodity. Television broadcasters allocate a set number of minutes of advertising to run each hour. The concept of scarcity doesn’t apply online. The Internet is a giant copy machine generating an abundance of everything in digital form.

The obsession with CPM online is dangerous, not only by pushing major media companies into a vicious downward spiral of decreasing yields and profitability but by not delivering anything near an effective result for advertisers. And yet, despite its inherent and obvious evilness, we as an industry continue to openly horse trade impressions. It’s almost like we’re Edward Smith, the captain in command of the Titanic, calling for water pumps to suck water in to the sinking ship after it hit the iceberg – by supporting CPM we’re hastening our demise.

Publishers who should be obsessed with creating customer value and linking a passionate, engaged user base to advertisers is almost single mindedly obsessed with slide-shows, top 10 lists and content aggregation (read stealing someone else’s content, re-packaging a summary and posting it as your own). On the monetisation side, the entire online media industry has become somewhat of a parody of itself, which goes something like this:

In an attempt to pretend the purchase of impressions hasn’t become completely commoditised, media agencies encourage competition between publishers by submitting briefs containing minimal detail, at the last minute (no doubt driven by impulsive requests from their clients) and stating that the most “creative, different” brief response will win the lion’s share of the budget for an upcoming campaign.

Sales personnel at media publishers then scurry to the product and content teams, creatives and everyone else on the way asking them to stop everything they’re doing and start “getting creative” – the agency fully aware that exasperation will reign supreme as the sales team all have targets they’re desperate to hit.

Product teams at online publishers are then subtly forced to drop their pants, not only by diverting scarce resources already allocated to develop their product roadmap (the things that make consumers want to visit in the first place), but by making concessions for one off commercial integrations which have no long lasting value for consumers, advertisers or the publisher itself. These often involve increasingly distracting, non-standardised advertising units whereby, I’m guessing, advertisers hope that their banal messaging will somehow be noticed and adopted if a user is driven to insanity by the incessant push down, roll over, scroll out, blinking mayhem that has become standard practice on the modern web.

An incidental problem here also being some advertisers don’t understand the ineffectiveness of this approach yet seemingly still subscribing to the “reach is everything” theory made popular in the 1950s, and already out of fashion by the time of Don Draper. Those types of advertisers, like the snotty nosed bully in high school, make the mistake of confusing attention for popularity.

But I digress. All of this creativity shopping to publishers by agencies is a charade, because what inevitably happens after publisher responses are submitted is that the media agency opens up the dreaded spreadsheet titled “[Advertiser] Campaign [month] [year]” and enters in two figures: 1) total promised impressions and 2) total cost. All the “creative” integration work goes into a column labelled “value add”. The total cost is then divided by the total number of impressions, itself divided by 1000, and the result is a single, evil and morally bankrupt figure the size of which the media agency and the publisher sales team haggle over – one wanting it to be larger, the other smaller.

This number, as you either know, or have guessed, is CPM.

If any online advertisers out there reading feel like they’ve pulled back the curtain on the Wizard of Oz, well, I completely understand.

For all the palava that goes on trying to pretend otherwise, CPM is unfortunately the ethanol-added, unleaded petrol of the online media industry. And for all the posturing by clients at their wanting “something unique and different”, what they’re really paying for is impressions, make no mistake.

By pandering to CPM’s seductive simplicity, we’re genuinely destroying the Internet. Ask any television broadcaster if they’d run a channel which was composed of a small single line of text in the middle of the screen surrounded by 8 different TVCs and you’d have some idea of how traditional media sees the online media madhouse. Because there are no limits online doesn’t mean we shouldn’t apply some. These days the once annoying 16 minutes of advertising per hour on television seems like a relative yoga retreat to online media’s Times Square on New Year’s Eve.

Most people working in this industry realise this. As an industry, we’re not stupid and what I’m suggesting in this article isn’t anything new. I believe that media planners, creative agencies and publishers themselves fully understand what CPM is doing to the industry as a whole, but the drive for change is at about the same level as the metabolism rate of a three toed South American sloth. There are too many incentives at the moment for everyone who plays in this game to maintain the status quo.

Unfortunately the shift towards “performance” media, once seen by media agencies as a possible solution to this problem, is a shift in the wrong direction, if only because there’s nothing even remotely resembling performance about performance media. I’m not able to stick a Lamborghini badge on a Datsun 180B, so I’m not sure where publishers get away with slapping the word “performance” on CPC models based on remnant inventory.

Every publisher has a skeleton in its closet which involves agreeing to a CPA deal, proposed by an agency keen to expand the number of acronyms it presents in quarterly client reports, which a week from closing is desperately short of its acquisition target. At that point an automated ad server kicks in and starts throwing even more impressions of a campaign users weren’t interested in in the first place at even higher frequency in an attempt to hit  an acquisition target which was determined by a Roman style sacrifice to the gods. This all leads to even lower click through rates, and hence more impressions. Rinse and repeat for another 6 days.

At no point does anyone think to sit back and determine the impact on the advertiser brand of throwing multiple impressions of a call to action campaign at a huge audience of people who weren’t really on target in the first place, because as long as the numbers in the “budgeted” and “delivered” columns of “[Advertiser] Campaign [month] [year].xls” add up, everyone has done their job right? With very few exceptions, that’s the end of it. The actual results of all this impression mongering are rarely measured.

Yes, the system is broken, and yes, we probably all realise it – but what do we do?

The solution isn’t all that difficult, it’s been used in offline media for decades. We just need to start focussing on what’s important to the advertisers here: business marketing metrics. These are the marketing metrics that are rarely mentioned in online media, such as message recall, brand awareness, purchase intent, likeability and actual sales results. Media metrics, like reach and impressions were invented for efficiency’s sake in trading offline media and a strong correlation between business marketing metrics and media metrics was observable over a long period of time in the offline media world. However, not much work has been done online to determine which types of campaigns have the best effect on business marketing metrics online. That’s where the focus needs to be, and with billions of dollars at stake, this is no crap shoot. Some people are going to get real rich mapping business metric outcomes to online media campaigns in the coming years.

Yes, business marketing metrics are harder to measure than their media metric counterparts at the moment and the momentum required to retool the system is significant, but the trend has begun to shift towards better consumer experiences and more relevant advertising. This means the way we operate today is doomed to fail as it results in terrible user experiences and completely irrelevant advertising. As many publishers, advertisers and everyone else in between are realising, a better, more relevant user experience is just a click away.

So advertisers, to get started, I think the new world begins with you. Start buying and paying for the things that matter to you. If you’re interested in brand lift, purchase an online campaign from your agency which promises just that. For now if we start with that one small step, the rest should follow.

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