What’s the Matter with CPMs? A Lot.

I think that we can all accept and agree that online video ad spending will grow, even with the current economic state. Advertising in general has taken a hit, but rich media ads show extreme promise. For instance, eMarketer predicted that video ad spend will increase 45% in 2009 .

Online video has the ad spend, but not the model. Currently, the industry is using the same, traditional cost per thousand impressions (CPM) model that’s used for TV for online video. The problem is that CPMs don’t work because the digital space is completely different from television. Since content is consumed differently, advertisers need to measure the performance of online ads by just that – performance.

There isn’t an industry standard yet, but advertisers are starting to get the clue that the CPM metric is inefficient and that ROI depends on shifting to a performance-based pricing (PBP) model.

In an iMediaConnection article , Real Time Content CEO Naj Kidwai discusses this shift and how advertisers can take advantage of it. iMediaConnection boiled it down to 3 major take aways, which they list at the top:

* The CPM model doesn’t translate to online video
* Video ads can be developed with thousands of variations to encourage engagement
* Performance-based pricing brings more value to the advertiser and rewards the vendor

Read Naj’s entire article in iMediaConnection here .

Tags: Byline, eMarketer, iMediaConnection, Pricing, Reporting, Video
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