Your best customers - version 1.0

Ok, so today comes this.

and comments are here and, though not a direct comment but relevant, here.

Yeah, that's the problem - outside of advertising directly sold by sites (which is difficult to scale, really), the prices sellers get for ad impressions are very, very low. And while money is moving from traditional advertising (read demand), the supply of online ad impressions is probably growing faster.

What happened to Targeting?
Makes sense, I guess - more supply than demand - prices stay low. But I thought online advertising was supposed to introduce a new dimension to the problem - namely, better targeting. In other words, in the radio or TV or magazine ad business, it makes sense that demand dropping faster than supply (or supply increasing faster than demand) would negatively affect prices. However, the increasing ad impressions online are supposed to allow advertisers better return because they are supposed to be better targeted.

There's something happening here but what it is, ain't exactly clear
If you are a direct marketer*, you're not concerned so much with the flood of advertising online - you buy based on metrics you've defined for your business like "CPL=cost per lead" or "CPC=cost per click" that somehow tie-in your cost of acquistion and customer life-time value. Ad impressions below (lower cost than) the metric are "good" impressions and ad impressions above the metric are "bad" - and you ruthlessly penalize publishers or ad networks or your dog that give you bad impressions by pulling campaigns quickly.

A more perfect union
But aren't there hidden costs in those impressions - both good and bad - that everyone (advertiser, agency, network, publisher) in the value chain is paying? Those costs are inefficiencies introduced because the technology available for targeting those impressions are limited or immature. And don't those higher costs in the system move what could be "good" impressions into "bad" for everyone?

Sure, you can buy those ad impressions using content-as-a-proxy such as buying "men-oriented" content sites/networks/impressions. But how is that better than buying ESPN or Rush Limbaugh radio (honestly, I don't know if Rush's radio programs attract more men than women, its just a guess) or Maxim magazine? You get to know the rate that people clicked online - but, really, so what? 

Online's promise is to create a more perfect union between ad impression and potential customer for the marketer via TARGETING. That's why more solutions are appearing on the market that promise demographic, behavioral or predictive targeting. Each of these techniques narrow the field of impressions to those (hopefully) likely to deliver better response. But, wait, is it possible to narrow the field of impressions another way - to those prospects who actually respond? If I was thinking starting a new company (oh wait, I am) - I might start thinking about that.


*Let's segment, for the moment, advertisers into brand and direct marketers. Aside for some marketers at the extremes, I realize that many marketers belong somewhat to both categories, but most marketers (or marketing campaigns, really) are generally more "brand" or more "direct".

Comments

[air max]

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