Moving to Performance Marketing
There’s a good article on Topix.net’s blog entitled 7 billion, $108 billion. 45 billion, $46 billion.. In it Mike looks at the revenues of Google and Yahoo coming up in his calculation at a CPM for search based advertising of $50 CPM and site wide CPM of $4. His calculation is flawed in some respects as to Yahoo! selling the homepage for a fixed amount of time, or that there are $20 CPM runs and more on Yahoo! probably but they are just not fully sold out at all times and that Yahoo! mail is huge but probably very bad to monetize. Another thing would be that his point about Wall Street valuing the search leader higher, which is untrue. They value the possibly revenue growth higher, and might be wrong there.
But his more interesting points come later.
_It is going to take continued developments in both technology and business models to successfully morph the current advertiser experience delivered by the publishing world (access to eyeballs) to that delivered by the search world (access to actual leads). Obviously, performance advertising was a great first step in this direction._
I absolutely agree. Having built a big performance marketing network, I know this to be the future in many respects. The problem is factoring in branding into the equation. I starting an idea of a quasi Tobin’s q attached to performance marketing, meaning that if performance based your ad would have a value of $3 CPM, you can add a Tobin’s q of 3 for high branding value and pay $9 CPM with an idea that you are getting your bang for the buck. It might even be used to factor in lifetime value.
In any case, the industry is still very open and we are just working on one part of the entire equation here that is driving the lead based model further into the long tail. The long tail is all about aggregating, finding a common ground to work on. It’s similar to how VISA works really, in that you just set the rules and then let people work with it.
Technorati Tags: CPM, Google, Ormigo, Performance Marketing, Topix, Yahoo!