January 5th, 2007

Blogs Have A Big Problem With Small CPMs

by

Chris Anderson highlights the tiny direct cash return that Guy Kawasaki earned on his first year of blogging: $3,350 at a CPM of $1.39. That’s a pitiful CPM by mass media standards — and it’s totally wrong. The way media has traditionally worked, the more “pure” the audience is, the more efficient it is for advertisers to reach that audience, and thus the more they should be willing to pay — that’s the whole rationale for niche media. If you have a product or service targeted at the entrepreneurial community, Guy’s 30,000 readers should be pure gold.

Sites like Forbes.com and BusinessWeek.com can get $100+ CPMs for vaguely defined “business executives.” Why shouldn’t Guy be able to get a $100 CPM from the right advertisers? I’ve heard Rafat Ali say that he won’t take any mainstream consumer advertising on PaidContent — that’s probably because he’s aiming at the high CPMs that his pure niche audience should command, and he doesn’t want to dilute that with low CPM “mass” advertising.

I’m sure the folks at Federated Media, Feedburner Ad Network, and a few others have their sites set squarely on this problem. The reality is that, despite the efficiencies that Google has brought, the online ad market is still rife with imbalances and inefficiencies, which means there’s a significant opportunity for anyone who can correct them.

Chris has a great line buried at the end of his post — he calls the web ad economy a “land of skim milk and honey flavoring.” Indeed.

  • Karlito

    Hi guys,

    I come from a totally different market (web publisher). The CPM figures are correct. This is what Adsense produces. It is nothing to do with ad placement, or the "advertising / marketing / internet" market. Much bigger sites do the same (proportionally). Its part of Adsense fault as their cut is 60%-80% of the revenue, and part of the advertiser's fault, as they still preferring offline traditional advertising than online one; hence the big money still didn't find its way to online advertising world.

    *A side note, Adsense is almost entirely CPC program, they do however show you stats comparing to what is know as CPM, and they named it ECPM. That doesn't mean you are getting CPM rates!

    So it doesn't matter if you are going to blog or build a website with new innovate idea in the near future, these are the rates you can expect, so unless you are getting big amount of traffic don't quit you day job;)

  • heuristocrat

    There is certainly a void in the space where high quality viewers exist in small quantities. I know my advertising sponsors would pay quite a bit to be in front of dozens of CEOs but very little to be shown to a million 14 year olds. There appears to be quite a bit of support for the latter but very little automated support for the latter. This is probably why direct sponsorships, even though rather 1.0 in nature, are still quite popular.

  • Yeah, I get all that Scott, of course some people can't do affiliate marketing.

    I just don't understand why everything has to "math" back to CPM as some kind of almighty measuring stick? That was my point.

    I suppose it's just that what people know.

  • Jim,

    CPM is just a reference point, i.e. PaidContent's flat rate sponsorships all have a net effective CPM if you just do the math. I think the key issues is that there's still a meaningful distinction between branding objectives and transactional direct response objectives. Take PaidContent advertisers, for example -- how are Jordan Edmiston or DeSilva Philips going to do affiliate marketing? The affiliate gets paid every time they do an M&A; deal? It just does work for that kind of business -- sure, they could have some form of CPA through a registration for downloading information, but really they just want exposure for their brand.

  • Not to be snarky, but what's the fascination with cpm's? I admit, I come from a results background, so I'm biased, but I've never understood the cpm way of thinking. It really only benefits high traffic sites, with minimal, if any except branding results for the advertiser.

    For blogs especially, CPM makes zero sense.

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