Follow-up to the Dashboard post: What’s your CPM?

There was a comment on the dashboard post regarding brand marketing vs. direct response marketing, that demanded a follow-up post.

Having been working online for more than 10 years here, I can say without a doubt that performance-based marketing, and Google itself, has driven internet marketing and content production more than anything else.

I only need to look to major equity deals like NexTag’s billion dollar private equity deal, AOL-Advertising.com, heck even aQuantive-Microsoft as a few examples.

I hate to keep pointing to other people’s blog for fear that this blog lacks value, but I’ll point to expert Andrew Chen’s blog one more time here because he eloquently describes the need for brand advertising to catapult a business model.

The reality with performance-based marketing is that it’s very iterative, competitive and non-service based. I’ll use this example, I am purchasing the keyword “Las Vegas hotels” on the top spot at Google. Let’s assume for example that my creative is a mirror image to the client’s below me. How do I get that spot? Obviously by bidding higher.

The point, small increases in effective CPC or CPM, can power large gains in volume. Let’s use an EDU example, I’m NexTag bidding versus ClassesUSA for the Yahoo Marketplace position. If I bid $.05 more per impression (or even less!) I own vast amounts of volume. Assuming that placement averages 200 leads a day at $60 a lead, that $120,000 in revenue that I’ve been able to earn by bidding just a fraction of a percentage more.

The point, gains made in online marketing are iterative and need to be well coordinated.

In the simplest terms, I need to own the highest RPL or RPA (Revenue per lead or acquisition), own the highest conversion rate, and own the highest Cost per Acquisition vs. Volume metric — or I at least need the aggregate of these to be slightly better than my competitors. That takes technical sophistication (products and integrations), expertise, and competitive strategy. It’s a lot of heavy lifting….daily.

Which brings me back to my point? Say I’m buying inventory on Yahoo Autos! and arbitraging that traffic an effective lead price or cpm arb price, I can bid $2.00 CPM for that traffic and I’m constantly fighting off my competitors at $1.96 and maybe $2.01.

However, I have absolutely no answer for Lexus who comes in there and buys that exact same inventory at $7 – $14CPM (at that’s probably ROS, non-roadblock). How do I possibly manufacture a competitive $7CPM on member value or lead price. I can’t.

90% of marketing dollars–I’ll check that fact–are spent on brand advertising. It’s the reason that Google decided to bite the bullet and partner with Publicis. Their thinking, “Well I can’t come up with a great product yet for all brand advertisers, in fact most of them fear me, at least I can move the needle by partnering with one of them and getting some spend.”

The biggest opportunity online is in successfully scaling a brand marketing solution. A solution that brings those double digit CPM online in earnest and with consistency.

Any “solution” directed at performance marketer needs to provide such a consistent and measureable ROI impact immediately upon integration that increases conversion exponentially and I just don’t see that happening.

Thought I’m not sure if I see someone able to short-circuit the brand/agency sales cycle either, but if the product’s there, then there has to be a good salesman somewhere.

A quick note here: A thanks here for everyone who has taken to reading this blog and providing feedback. Getting thoughts on paper, or screens rather, is great in terms of hearing other people’s opinions on Internet marketing.

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