Genuine VC: The Simple Online Inventory Equation
Great post by David Beisel at Masthead on online advertising and the transformation of CPM to “cost per reaching the right customer.” Developing this efficiency is not going to be fun, but expect the behavioral targeters like Tacoda to lead the charge. Online advertising is beginning to walk upright from its old posture of crawling on all fours and measuring CPM, CPC and other blunt “stupid” measures.
“The beauty of the interactive medium is the ability to more effectively target the right consumer for the advertiser’s message. Whether advertisers realize it or not, the right metric to view media buys isn’t CPM, but rather effective cost per reaching the right target customer. And while television and print advertisers have striven towards improving this measure though demo- and geo- targeted buys, the interactive medium allows for much more granular targeting. Witness e-mail marketing, contextual CPC campaigns, and search. Now with behaviorally-targeted networks like Tacoda, advertisers can reach consumers with even more precision (e.g. demonstrated car buyers who are surfing ROS news, weather, or sports pages). So while publishers are earning higher CPMs for their pages (thus raising the weighted-average CPM on the ‘net), the technology allows advertisers to more effectively reach who they want, which is the true goal in the first place.”