Talking About A (R)evolution…

As 2009 tales hold, we’ve been growing philosophical about the accelerating rate of change in online media brought about by this economy, and its implications for performance marketing.

If you’re anything like us, you’re not succumbing to negativism; you religiously continue to rely on your solid online marketing fundamentals to help moor you through these unprecedented times. And because you have to be, you’re more open to new methods and new models than you were before. A pundit recently said: “Survival is the new success.” We can all do better than that.

In these times of “deflationary expectations”, when the established online advertising standard (guaranteed CPM) is no longer the operative principle, only the agnostic performance marketers are equipped with the flexibility to miss looming extinction or at least, major decline. The prevailing theme seems to be “Change or Die!” It’s all quite Darwinian.

It’s not that the CPM model is inherently wrong. It is just not realistic for 2009’s conditions. Witness the deflation that’s already occurred in email pricing — many lists are available at 40% less than last year; others are working on a rev share basis. List pricing is directly reflective of consumer response: if consumers are avoiding a category, CPMs must fall in synch.

Remember the Discman Player? When you occasionally still see someone on the subway with one, you think to yourself, wow, not too long ago (the mid-to-late ’90s) that big-ol’ clunky thing was state-of-the-art… as you glance at your tiny yet powerful mp3 player. The standard CPM model has become the new big-ol’ clunky thing.

Of course, no one foresees the complete demise of CPM. It’s really more about evolution or adaptation. When conditions change, successful species adapt. Everyone knows conditions are changing rapidly, and marketers will continue to demand greater and greater accountability from all media. The CPM-based media species that will thrive are those that will integrate the best elements of performance with what they already do best.

Traditional CPM simply cannot cost-effectively enable drilling down to the finite data needed to construct composite profiles to optimize campaigns and ultimately lift conversions. Performance models, however, provide the flexibility to test your way to optimization.

Recognizing this, some media players are sparking a trend toward hybrid models: a lower, but guaranteed base CPM with a performance kicker. If your agency isn’t negotiating such adaptive deals with media, they should be.

by David Muhammad & Gary Kreissman
David Muhammad is vice president, sales & business development, at Precision Prospects, Inc., a performance-based advertising firm. Gary Kreissman is co-founder and president of Precision Prospects.
Courtesy of http://www.mediapost.com