(This was a response to my a comment from "Adblocking is Missing the Point." It got way too long, so I decided to make another blog entry instead.)
Hi Chris,
Actually, I'm aware of the cost per mille model. I guess it sounds like I’m speaking out of complete ignorance, but really I’m just trying to speak to how I think things should be, not necessarily how they are.
You're assuming that ads only make money for a publisher when they're clicked on. They aren't.
That’s not it at all. What I’m saying is that when the publisher gets paid for my impression (specifically me), the advertiser is not getting value. Neither am I. If this phenomenon grows, the publisher will eventually lose out as well.
I’m Not Denying the Revenue
Let’s look at the numbers. Your site gets 3% CTR and that’s considered pretty good. However, another way to put that is that 97% of your readers are served up junk. Even if you quadrupled or quintupled the positive effect the CTR may indicate, that still leaves 85% of your readers out in the cold. I’m not denying the revenue it generates for you or the sales for your advertisers. But what I’m asking is: isn’t there a better way? There is a huge inefficiency there somewhere. This is the shotgun blast to which I referred.
The Billboard Model vs. The Internet
Let’s also look at the model you cite when you speak of billboards and BMWs. Back in the day, the only way to reach people was to broadcast, via radio, television and the like. That was how companies formed “relationships” with people - by being omnipresent, they created a sense of familiarity within their potential customers. This familiarity made customers more likely to purchase a product from them rather than a relatively unknown competitor.
Is this really how things operate these days? Is the internet just a billboard on your computer screen?
I’m postulating that if you look around, you’ll notice that the old model is breaking down. If you’re trying to decide whether or not a certain company’s product is worth the risk of purchase, you don’t care if they are familiar to you from television, glossy magazine ads…or banners on blogs. What you are looking for are more accurate measures of their reputation. Sites like Facebook, Yelp (despite the controversy), FourSquare and blogs like yours (the articles, not the ads, ironically) better serve this need.
Are you really buying the BMW because they say they are the “ultimate driving machine?” I’m guessing you’re buying it because they make a great product and just about anyone who has one has only good things to say about it. Let’s see how well those ad impressions work once rumors of stuck accelerators start floating around.
There’s Got to Be a Better Way
In the end, I’m speaking as a consumer who sees an inefficiency and wants there to be a better way. I’m not trying to get rid of ads, I want them to work better. As subtle, insidious and lucrative the business of advertising is (yeah, I watch Mad Men), I still believe it can be improved.
After all, back when Yahoo was king ten years ago, CPM was the dominant form of internet advertising, and even though…
"...nobody at the time thought there was anything wrong with Overture’s model — it was making lots of money..."
...Google came along and developed CTR. I just don’t think we’re done yet.
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