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New Media will refine, not rewrite, the rules for what advertisers pay. CPMs to become CPFMs in our fragmented future 5/27/08

Posted by Steve Boriss in AdvertisingModels.

JackMyers.com has released an interesting commentary, noting how Old Media companies still cling to their old models for selling advertising, as demonstrated by the surprisingly traditional Upfront TV ad selling season that begins today. He wonders why it is still all about getting the lowest cost per thousand (CPM), based on supply and demand. Why haven’t we seen dramatic changes in the ad-buying process commensurate with the dramatically changing media environment? And whatever happened to the industry’s hope that by now we would have moved beyond that, for instance to advertiser-media relationships bound by innovative marketing programs and return on investment (ROI)?

I believe that we will see dramatic changes in the ad-buying process, but not the types previously envisioned. Getting the lowest price through the forces of supply and demand is a timeless, perhaps eternal, idea that will continue to dominate. But the old ideals of closer advertiser-media relationships and ROI-based advertising are now obsolete — they actually fit better with the old models than the new ones. The future of news is fragmented, and its CPM’s will be, too. Look for online media outlets and brokers/exchanges to define their audiences and establish CPM’s for different market segments based on their value to advertisers — perhaps creating new metrics based on cost per fragmented thousands (CPFM’s). Whenever competing outlets define similar audiences, price competition among them will ensue. The basic laws of economics are not about to be rewritten. (H/T: Walter Abbott)


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