A question around pricing and impact …


I’ve been thinking a lot around digital pricing recently, especially CPM.

Should you pay double to reach someone with a TVC online that you do on TV?

Should you pay triple to reach someone with a medium rectangle ad that you do for a Full Page Colour ad in a similar magazine (ie content and quality).

We talk about digital having the added benefit of interactivity and response – which is true – but when we look at response generally 1 in 1000 people are responding/clicking which isn’t statistically massive.

So are we getting double/triple the impact from digital creative that we are from other media? I guess it’s a question that hasn’t been answered.

Now I know people will come back and say ‘it’s not apples with apples so you’re wasting everyones time’ … which could be true … but I’m not so sure it’s not apples with apples. Now when you add layers of behavioural targeting and non standard ad units it is different … but if you running ads which are primarily concerned with exposure I think there’s some more opportunity to think about cost parity.

I was briefing out activity for a client last week and the CPMs some digital publishers were coming back with were 7-10 times more expensive than similar magazines. When you ask for rationale you get the ‘well that’s what everyone else is charging’ argument.

Trouble is, ‘everyone’ means other digital publishers … not everyone. And for digital to keep making progress it needs to look at the broader media world.

Pricing and impact are the 2 key things that will become critical in the next 6-12 months.

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7 responses to “A question around pricing and impact …

  1. Are you for real? Was their response really “we’ll that is what everyone else is charging?”. Seriously?

    That just shows a complete lack of understanding of what the company does and what their differentiators are.

    Not that I consider myself anything special but if someone asked me why we price something at a certain price or even why they should choose our company over others (who basically provide the same thing) then I would, and do, rattle of 3-5 things that set us apart and hopefully position and justify the price as one willing to pay.

    I would hope anyone would be able to do that. I shake my head sometimes at how some people can hold down a job or run their own business.

  2. I face the ‘pricing issue’ almost daily and can always outline the value of chosing me over others.

    Totally agree with Daniel. If I knew anyone working with or for me were telling clients that we are priced that way because it seems to be what everyone else is doing, I’d be having serious words!

    I’m still not sold that we should be measuring Online TVC’s up against traditional TV media. Maybe an extension of current online and TV media to increase reach, awareness and hopefully user engagement and intereactivity.

    JD

  3. Problem is how we measure online effectiveness to some extent!

    Disagree that interaction is only measured when someone clicks on the ad – brand metrics especially on premium or low clutter sites should be taken into account.

    Decreasing CPMs will not evolve the industry, it will probably kill it – creating good content is not cheap.

    Print readership stats are an interesting beast, and isnt the game about reaching a quality (targeted audience) or quantity (mass reach) – which as u say targeted or contextually relevant environments offer – something that is worth paying more for…

  4. talkingdigital

    Smoky – I think it is worth paying more for targeted or contextually relevant environments absolutely … but digital isn’t the only channel that offers these, magazines are also very strong at this and so is Pay TV

    I agree that interaction isn’t only click – I guess I was making an observation that when you look at interaction as a real % of uniques it’s generally a low number. This is probably more a consequence of current ad units and creative than the medium – lots of room for this to improve.

    My main point was more around how pricing is set and where it comes from in terms of rationale.

  5. Thing is – magazine readerships are almost always total rubbish. Anyone who’s ever been in the print industry knows that the numbers in terms of distribution, uniques and readership range from complete fabrications to dodgy at best.

    Online has some issues with tracking, but nothing on par with print.

    Also, while print offers a nice glossy page – it’s flicked over within 2-3 seconds. Gone.

    Even if it’s noticed, there’s no way to follow-up on the branding. There’s just a great hope that the person will remember the ad at next point of purchase or brand interaction and be inclined to either pay more for the brand or favour it over another.

    I’d pay more for an online ad any day….even if it really does cost more.

  6. I totally agree with you Ben. For starters we work out CPMs on an opportunity to see and not based on the number of people reached. If you take this into account, comparable digital CPMs are even higher.

    And also we are basing this reach calculation on UBs which are not a fair reflection of people reached.

    And then you need to think about what impact we are deliving. If we just serve the 30k polite banner but dont serve the video we still pay for the ad.

  7. Oh no, someone else in the blogosphere has the name Zac! This is going to be a problem if they’re not going to use a surname or link somewhere…

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