[Posted by David Card]
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Last week at the Marketing Forum, Forrester COO Charles Rutstein challenged a couple of us media & marketing analysts to answer the question, What happens when online CPMs get so close to zero that they make ad-supported businesses unsustainable? He drew scary charts on a napkin.
It's true that online media has been nearly overwhelmed by an onslaught of inventory — there's something like 80% more online ad space, a lot of it from social media, than there was a couple years ago. CPM-CPC "arbitrage" is being squeezed. (It's harder for a branded online media company to sell impression-based inventory to a network who targets it and resells it on a click-through basis.) Prices are being forced down across the board.
This is not all good news for marketers. If brand-name media companies can't make it online, it'll be pretty tough to do brand-oriented marketing, and difficult to construct integrated cross-media campaigns. Targeted remnant inventory can't do everything.
But for all the macroeconomic forces of "infinite inventory," some ad space — and some audiences — are worth way more than others. Cut clutter, experiment with new formats, and know your audience really, really well, is the easy advice for online publishers. Build out a marketing platform that's flexible in terms of targeting and in incorporating data from many sources. Encourage comparison. Add other sites' inventory to your own. Pit your salesforce against multiple ad networks to see who can best monetize some sections of your site (but hold back the best stuff.) Engage marketers and agencies deeply (even while you're trying to steal some agency functions.)
How can online publishers work with marketers to create win-win solutions? Let me know your thoughts.
Meanwhile, here are some relevant Forrester reports available to clients: