CPM? I Think
Not. Let me take a good CPA any day
by Zac Brandenberg
I cannot begin to count the
number of times in just the last few months that my company
(the list management division, that is) has been approached
by an advertiser or agent to feature their promotion on a
CPM basis. “Give me all the volume you have,” they say, and
then they’ll offer a whopping 15 or 20 cent rate for it.
Sickened, we always pass, and then attempt to work out a CPA
arrangement with the advertiser. The frank truth is that I
find the entire concept of buying on a CPM stupid (except
the extraordinarily rare occasion when the buyer actually is
looking for branding instead of spontaneous
actions). There, I said it.
Unpopular as that opinion may
be for those that only accept CPM advertising to their email
lists, there needs to be a long overdue reality check in our
industry. Guess what – email marketing is NOT television,
it is NOT radio, and, though it may further surprise some
who like to think otherwise, it’s NOT even direct mail.
Instead, it’s a medium where buying and selling is more
analogous to the environment of a swap meet or bazaar than
anything that carries the establishment or credibility of
the previously mentioned formats.
An advertiser never really
knows what he/she is buying when they buy email. In fact,
in many cases they will rarely know who it is that is
really selling to them. (Of course, this is not true
for the largest sellers of advertising like Yahoo!, who
operate more like traditional media companies, but we're not
talking about them.) We're talking about the average
publisher, perhaps accessed by the advertiser through an
agency or broker, where the advertiser has no idea what
they're buying. So why should advertisers pay top dollar?
What is the product worth? The only way to be sure is to
err on the safe side and pay as little as possible. Thus
advertisers wind up pitching list owners on a low-ball CPM
(hey—it’s guaranteed money! No need to even get a sale!),
maybe even prepaid to sweeten the pot, that’s just so low
it’s sickening.
But it’s really not
advertisers who have driven the CPM market down – it is the
publishers who have jaded the media buyers. To assert to
advertisers that you as a publisher will only take CPM is
destructive; again, it might not be that way if the site
asserting such was Yahoo!, but the likelihood is that the
site in question is simply a single list owner or manager,
with ‘X’ gazillion ‘double opt-in’ names, and for a limited
time only, the advertiser can buy the entire file for the
steal of the century, 15 cents per thousand—even less
if they wire the money right now. Ugh. So the buyer
bites, maybe with your site, maybe with several other
similar sites, and now what? Did we just price ourselves
out of any credible market, and turn yet another advertiser
into a jaded machine?
Although the most conservative
among us may never feel this way, I recognize that we on
the publishing side of the table have an obligation to take
some risk when running a promotion. Again, reality check –
a drop to any of my lists is not equivalent to a 30 second
buy on Friends tonight. 30 million people may watch
the series finale, and I may claim I can email 30 million
people, but if anyone thinks one number carried anywhere
near the same weight as the other one, well -- where's that
Brooklyn Bridge contract? There is no ‘pound of
feathers/pound of bricks’ metaphor to draw here – one of
these things is simply NOT like the other. So it’s logical
that as a publisher of an email list, not of a newspaper or
a television show with a verified circulation or audience, I
should understand that my advertisers should have no reason
to trust me in the same way. I don’t have the same power I
would have in another medium -- but more importantly, I
don’t have the same security of knowing that I’m going to
show something to a certain number of people and be
guaranteed a certain revenue stream – and that’s where my
risk comes in. But with that acceptance of risk, we as
publishers gain leverage – we can concentrate on what’s
real, the action that an advertiser wants, versus all the
various calculations that go into deriving that bottom line
customer acquisition cost— we can cut the bullshit by
working strategically with the advertiser to build an
aggressive action-based pay scale, whether it be a raw
bounty per activity or a revenue share on sales. For Hydra,
as a full service media agency, this leads to the best of
scenarios for not only us but our Clients. We are now
partners with our advertisers, sharing the same goals (high
action volume) versus simply caring about dumping email into
the Internet to fulfill some ‘impression’ based order that
actually has nothing to do with impressions, simply because
an Insertion Order specified a certain number of emails be
sent.
To be completely honest,
however, I don’t just accept the “risk” of only taking CPA
deals because it is the right thing to do. I also
do it because, if you manage your customer files properly,
it is the smart thing to do. Hydra now actively
manages 13 separate and distinct consumer files, and because
we run a confirmed model only (where all recipients have
confirmed their membership and validity of their address)
and maintain strong relationships with ISPs, I know I would
be doing a disservice to each and every list owner if I
accepted a regularly (or even high) priced CPM deal to their
list. Over the course of a month, most lists maintain an
average eCPM of between $3 and $10, depending on
origination. As I would never expect an advertiser in this
market to take such a risk and pay such a CPM from the get
go, it’s much more appropriate to forgo CPM and get right to
what an advertiser can pay. It’s a number they are
going to be satisfied with, because it is predicated on
actual, measurable performance, and I’m going to be
satisfied as well because, if I do my job correctly, I’m
going to profit appropriately.
Next week: Not every
“confirmed” or “double opt-in” list actually performs. Find
out some of the email management tools and tricks that Hydra
uses to cultivate responsive customer files and ensure
delivery, day in, day out.
Zac
Brandenberg is the founder of Hydra Media Group, Inc., a
Los-Angeles based media firm focusing on e-commerce,
database management and affiliate marketing. He may be
contacted at
zac@hydragroup.com.
