Lydia Stark, Director Ad Sales Internet Wire, wrote this zippy and insightful response to my Blog of 1/25/02 when I suggested that publishers start spelling out CPA/CPC deal rules and regs in their media kits:
"Re: CPA deals -- yes, they make my skin crawl too. What bothers me most is the smug attitude from some of these advertisers who come at me with 'we really got ripped off when we bought on a CPM basis, so we're only doing CPA's now'."
Perhaps long ago the CPM's were excessively high (especially those charged by the major portals and sites). It was a case of jumping on the bandwagon without any attention to the details which determine whether an advertising campaign is successful or not. The 'first movers' threw $$$ into Internet advertising with abandon, until their investors started demanding accountability. Then all of a sudden, these advertisers did the 'marketing math' only to discover they weren't achieving a reasonable ROI.
The pendulum has swung too far in the opposite direction, in my humble opinion. Online publishers are being 'punished' by advertisers who feel they must regain the upper hand in media negotiations. I couldn't agree more with your premise that publishers need to establish the ground rules for accepting CPA deals. At Internet Wire, we ask to see samples of creative, we ask what the offer is, what incentives are being offered, and how this advertiser differentiates himself from all the others in his category. As a smaller, niche site with only 500,000 subscribers, we can't compete with the 'big boys', i.e. Yahoo, AOL, etc.
CPA and/or CPC deals appear to work when the subscriber base is large enough (in the tens of millions). It's all volume driven. If you can deliver a sizable audience as a media owner, you at least have half a chance of making some money on one of these deals. Otherwise, you're giving millions of impressions or deliveries away and not getting much in return. Trust me, I've seen this with countless CPA/CPC deals we've run or been presented with.
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