As overall online advertising continues to weaken, display ads are absorbing the brunt of the downturn. So what do you do if you are in the online display business with an ad network that reaches 85,000 mostly-smaller sites that don’t command much of a premium per impression in the first place? You start selling those banner ads on a cost-per-click (CPC) basis, which is exactly what AdBrite started doing today.
CEO Iggy Fanlo says he is seeing a “massive supply-demand imbalance” in the cost-per-impressions (CPM) world. There is just too much display advertising inventory sold on a CPM basis, and advertisers are fleeing to performance-based ads whose effectiveness are easier to measure. In fact, Fanlo expects:
Within 6 months, we will be 50% performance-based on the banner side. I think there are a lot more bidders there.
Today, AdBrite serves up 800 million ad impressions per day (25 billion per month) and has a reach of 90 million people in the U.S. While it’s typical CPMs are between 50 cents and $2, that is still a massive number of ads, and the fact that Fanlo thinks that half of AdBrite’s ads will be sold on a CPC basis within six months could be an indication of where the entire market is going. Or at least the lower end of the market.
Selling banner ads on a CPC basis is not a new idea, but up until now there has not been much of an appetite for it. With banner ads not selling like they used to, all of a sudden the idea has become more appealing. Why now? Fanlo suggests:
We really had some push-back from publishers until we had a supply-demand imbalance. This was a fallback position, much like Google was the fallback in 2001/2002.
AdBrite, which recently laid off 40 percent of it staff, does not want to remain dependent on CPM ads alone.
If this does signal a larger trend, what does that mean for the health of brand advertising on the Web? Typically, brand advertising has been associated with display ads, while direct-response advertising has been more associated with paid-click text ads. Turning display ads into paid-click ads will mean that we are going to be seeing even more direct response ads and fewer ads simply trying to raise brand awareness because the latter is more difficult to measure. Fanlo acknowledges this possibility, but shrugs it off, saying:
I cannot change the world.
Perhaps not. Fanlo is just reacting to what he sees out there in the market. Yet, while brand advertisers might like the idea of CPC advertising, they might be disappointed by the actual results. The people who click on those ads, might not be the consumers they want to reach.
Is Video Egg going out of business?
I doubt VideoEgg has blown through the $15M they raised 14 months ago. Plus, theyre new iPhone offering should be enticing. Too new of a space to let them go by the wayside.
“advertisers are fleeing to performance-based ads whose effectiveness are easier to measure”
Performance based advertising is the only kind that makes sense in such tough times. CPA networks will start gaining the strength they deserve in the marketplace. Google Affiliate Network will be huge for 2009 and CommissionJunction will stick around too.
Welcome to 2008 Adbrite. You have really nailed it this time.
Plenty of networks have been offering this since–I dunno–FOREVER.
The million dollar question: will this improve performance/conversion for the advertiser? Methinks not. With no targeting and modest fraud protection, I am going to end up paying more!!
I wish I had more confidence in Iggy. He will drive that company into the ground. Oh wait, i’m sorry…he DROVE it into the ground.
http://www.tech...-video-product/
If CPC banners is half as brilliant….it won’t last a year either.
@Jamie – spottt on
Heh, almost two years later, guess that product had no impact.
In another life, I used to be a large valueclick customer… CPC was very popular back in 1998-`00; round and round we go.
Stay away from Adbrite, Adsense beats its horribly. Even really low players beat it by atleast 50% margin.
They used to be good and we were making $20~/day using them as filler but over night rates dropped to $1.25~ cents per WEEK (with 50K++ uniques/per day). Does not make any sense what so ever. Their system is a joke.
Yeah, couldn’t agree more; tried them for a while and ended up making less than 10% of what I was making via adsense.
Don’t think that will make an impact, CPC is nothing new and it’s there for a decade. Adbrite should improve their relevancy and its ad performance.
NOt really interested with adbrite. I prefer adsense or widgetbucks.
Hoho..but everyone have their own reason right?
Used to use them for a while. Didn’t like them much either. But if they make it happen this time around, I’m happy to throw in a spot for them.
F**king A…Way to go PUD, I’ll put that to work right away. This should really help out. To my knowledge Google does not have a cpc.
This will change the playfield. It will definitely lower revenues because noone will go cpm, but it might attract more advertisers.
So, it remains to be seen.
At comScore. we’ve measured the average click rate on a display ad as now being under 0.1% while the view thru impact is substantial with lifts in site visitation (+46%), trademark search queries (+38%), online sales (+27%) and offline sales (+17%). See this release that summarizes comScore’s findings:
http://www.coms....asp?press=2587
Selling display ads on the basis of CPCs is a great deal for the advertiser but a disaster for a publisher
Gian, wouldn’t your data be off on CTR? I mean, you are measuring people that are silly enough to download a tracking software…right? I would guess these people actually may click on more ads
There’s a significant flaw in your logic.
> A great deal for the advertiser but a disaster for a publisher
It depends on the CPC bids. If it’s a deal for advertisers, the bids will be high. There’s no such thing as a bargain in a liquid market.
I’m surprised this is coming from ComScore.
AdBrite is the biggest scam out there. They use view-based conversions, and bury that fact. So if you’re buying a lot of media out there, then you’re probably double-counting. The CPA might look good, but in reality, it’s not.
etology.com has been doing this forever!
Pud and Iggy really failed this time. Adbrite tried (and failed) to compete with AdSense. Cased closed — add them to the deadpool!
spanky – most of the industry values view based conversions, deal with it. 3rd party tracking such as DART and Atlas is used specifically to track which media buy drove the conversion be it view based or click based.
Back on topic though, it’s not exactly the most epic innovation is it.
Brand impressions are quickly becoming the giveaway in the freemium services called CPC and CPA.
Today, AdBrite serves up 800 million ad impressions per day (25 billion per month) and has a reach of 90 million people in the U.S.
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How many servers AdBrite uesed? And what is architech, which logable 800 million ad impressions per day? Did you know?