It’s about branding, stupid

Online advertising is not only about clicks, leads and acquisitions… branding is important too….

There are a number of competing online advertising models on the net. By far the most dominant one used by online publishers is the Cost-per-Thousand (CPM) model. CPM is the closest online advertising gets to advertising in traditional media. The advertiser pays in advance to place an advert that will be displayed to the website’s readership base, which should generate return on investment. Through the campaign there will be branding for the advertiser, click-throughs on the advert, leads and hopefully acquisition of the product. Everyone’s happy.

Then there are two other online advertising models – not terribly popular with online publishers — that least resemble traditional advertising. These are known as Cost-per- Acquisition (CPA) and Cost-per-Click (CPC) advertising. Online publishers are wary of these models because they say these types of ads fail to recognise the important branding component of advertising.

For CPC advertising, the advertiser only pays when a user clicks on the advert. The most famous implementation of this is Google’s contextual search ads, which is a mostly text-based CPC model networked across millions of online brands, from the largest to smallest publishers.

Critics of this model say it relies too much on honesty, because who is to say a person clicking on the ad is not just clicking arbitrarily or trying to ramp up a website’s revenue? This is otherwise known as “click fraud”. Supporters of CPC counter that although fraud is unavoidable, instances of honest usage by far outweigh comparatively smaller instances of fraud.

Most large online publishers generally avoid the CPC and CPA models because they claim it puts them on the back foot and results in an unfair relationship with the advertiser. Despite resistance to this kind of advertising, however, publishers have made exceptions by allowing Google ads on their sites simply because they work so well and the ads are mostly text-based so generally don’t result in free branding.

But by far the most controversial advertising from an online publisher’s perspective is the CPA model. It effectively means that an advertiser can place advertising on a publisher’s website and pay only if a user results in a lead or buys the advertiser’s product or service. That means branding and even click-throughs come free.

Imagine if this advertising model was as popular in the print or broadcast world as it is online? Television and magazine companies would be bankrupt.

On the face of it CPA advertising may appear to make sense. Because the net is so measurable, we are able to track who clicked on what advert and bought which product with chilling accuracy. It’s this added benefit of measurability the internet brings to the party. It makes publishers more accountable to advertisers, and gives an advertiser more control over their campaigns.

But just because we are able to measure click-throughs and acquisitions on a particular ad campaign, it does not mean this should be the only measurement for success.

Publishers argue the CPA model fails to recognise the importance of branding. A user may not click on an ad or buy the product then and there – but the user is exposed to the brand which may lead to a purchase via another channel at a later stage.

This is the way the advertising model has worked for years and years, so why re-invent the wheel?

From Netsavvy

Comments (2)

  1. Gregg Borne wrote::

    I think you might want to read the free white paper on click fraud avilable for download here:

    Wednesday, January 10, 2007 at 1:07 am #
  2. matt wrote::

    i’ll check it out… thanks

    Wednesday, January 10, 2007 at 3:44 am #

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