Wednesday, April 18, 2007

CPC, CPA, or CPM: The Publisher's View

It's increasingly important that we, as PPC (define) search marketers, understand the publisher's view of the media ecosystem's changes. With more contextual and behavioral advertising opportunities released almost monthly, publishers and marketers are faced with rising complexity and more choices than ever before.

Within Google alone, ads can be targeted contextually across a full network or with site targeting, as well as in pure search. And now these ads can also be bid on at a CPM (define), CPC (define), or CPA (define) basis.

Publishers have one asset they use to earn revenue: their readers/viewers. The trick is to maximize revenue, both short and long term. The reason I distinguish short and long term is because some ad opportunities that garner significant short-term revenue may also turn off visitors. Pop-ups, pop-unders, excessive ad clutter, or use of too many interstitial ads can lead to user abandonment.

As an advertiser, you may think it doesn't matter what publishers think or do. You can only control what you're willing to pay, what ads you run, and whether you buy ad space on a CPM, CPC, or CPA basis. But by putting yourself into the publisher's mindset, search marketers buying contextual inventory can improve not only their ROI (define) but also the publisher's.

Publisher-Centric Considerations

* Ad diversity. It's easy to keep campaigns limited to text link ads, even as you expand testing into contextual targeting. After all, you already went through the trouble of writing the creative, putting ads into ad groups, and even testing multiple text ads against one another to determine which generated a higher Quality Score while retaining good conversion. However, publishers may set up their accounts to allow for image ads in addition to text ads because image ads fit better into their content. Google also allows click-to-play video ads. If you have available video assets, it may be worth experimenting with them, as they tend to get rotated into the mix at fairly good sites, such as LinkedIn.

* Freshness imperative. Even if you or your ad network hasn't set frequency caps that let you specify how many ad impressions an individual will see, publishers with large numbers of page views like fresh ads. This is similar to ad diversity but plays more to keeping site pages looking fresh, even when the advertiser is the same. On a major site, I recently saw the same Expedia ad over 20 times. Clearly, no one was keeping an eye on freshness.

* Ad stickiness. If you've selected a CPC or CPA billing method, the publisher and the network will favor the stickier ads. Therefore, your message must be clear and compelling. Unlike search ads, contextual ads often aren't perfectly matched to content. Even if they are, the reader isn't necessarily interested in that specific topic in the same way a searcher would be. The best contextual ads may be very different from the best search ads.

* Risk aversion. Though a CPA ad payout may be very high, publishers know there are risks associated with this ad type. Lost cookies, tracking problems, multiple computers, even competing CPA publishers all reduce the amount of money publishers might receive, even when that money is rightfully theirs. For this reason, publishers may take a lower effective CPM in a CPC- or CPM-billed ad just to mitigate the risks of a CPA deal not paying out as expected.

* The capitalist publisher. Even some medium-sized publishers will sell you ads directly at similar or lower rates than what you may pay through the network. One reason for this is the network's cut may be 20 to 30 percent. Another is publishers like direct relationships and may allocate better inventory to direct buyers. If you buy direct, make sure you use an ad server that's likely to reconcile well against the publisher's, regardless of whether the deal is CPM or CPC.

* The Darwinist publisher. Publishers see ad networks as a survival-of-the-fittest struggle. Publisher and broadcaster (in the case of video or podcast content) loyalties are to themselves, as they should be. Therefore, publishers always negotiate for the highest revenue share and look for networks that can deliver a higher effective CPM (ECPM). They regularly test the mix of third-party placements.

As a search advertiser whose placements are evolving into other media, you must understand the publisher perspective. It gives you the ammunition to insist your team invest in the development of more comprehensive, effective campaigns. The more effective your campaign, the more likely a publisher or network is to run it on a performance basis, either CPC or even CPA.