Online ad spend is on the decline. eMarketer has just re-adjusted their spending projections down to 8.9% growth in 2009 after earlier predicting a 14% surge. Although, that growth looks heroic when compared to lagging eCommerce expansion projections hovering around 4.1%.

The contraction in spending growth has forced the marketers to evaluate what can be pulled from their advertising portfolio. With few metrics to back value, display advertising is coming under fire. CPM rates are shrinking and publishers are concerned.

The More Things Change …

However, the growth of social media properties has made this a self fulfilling prophecy. In other words, “web 2.0″ broke web metrics. Back in 2001 top websites included AOL, Yahoo, MSN, and Lycos. To give you an idea, this is what AOL looked like circa 2001. It featured clear blocks of content resembling a magazine. You’d click, read, and move on.

Flash forward to 2008 and the top sites are Facebook, MySpace, and YouTube. These sites generate 100s of page views per session as users take quizzes or page through photo albums. MySpace is a perfect example of the impact on CPMs as it happens to also be the largest display publisher on the web.

However, despite the drastic change in inventory, the metric remains the same. But an impression on AOL circa 2001 isn’t the same as an impression on MySpace 2008. Publishers on social networking platforms realize this more than anyone. High page view apps generally command a lower CPM than low pageview apps, simply because the high number of page views dilute the revenue from those ads even if they make more money overall. CPM is only useful when you’re comparing apples to apples and we’re far from that now.

How Do We Measure Success?

If CPMs isn’t a good measure of success then what is? Metrics must be geared toward a goal. Then the format is optimized around the goal. In search advertising it’s traffic, or lead generation. In direct response it’s conversions.

But CPG (consumer packaged goods) brands don’t need more traffic and they aren’t looking for viewers to fill out lead forms. Brands like Coke and Diesel are looking to create a meaningful impression. Meaning isn’t a metric measured by just clicks or views. It’s an emotional reaction that the viewer feels when seeing or interacting with an advertisement.

The industry needs desperately toward moving toward metrics that take into account meaning. We need metrics that understand clicks and impressions can represent social interactions or signify engagement. We need what we call “performance branding”.

Tags: advertisers

This entry was posted on Tuesday, November 25th, 2008 at 5:51 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.