Having a name like CPM Advisors (we often like to go by CPMa if you hadn’t noticed) and being a company that for the most part, buys CPM advertising inventory to optimize for marketers’ at a CPA level, we obviously get into the CPM vs. CPA discussion a LOT. Several of us have a leadgen/CPA background which I think puts us in a good perspective to think about how we make something work for someone who has a goal that is on the more tangible side. Having run an ad network, bought media, sold media, etc. and been on both sides of the publisher-advertiser continuum (and in-between) I think we also realize the large effect that deal structure has on incentives to perform and make deals work.

As someone selling media, CPM seems great but for the buyer it’s not the best experience. The seller need do nothing, really, for any particular deal. They collect money regardless of performance. Obviously in the overall sense, as word gets around that their CPMs are too high relative to performance, people will not buy from them, but in the micro case the onus is on the buyer to know the underlying characteristics of the media and make an assessment about whether to buy it or not. On the other hand, CPA gives the power to the buyer. They determine an activity or metric and the price they can pay for it, it’s performance-based, and absent any issues with fake leads or anything like that (not to be addressed here) they are happy. The incentive for the seller now is to collaborate and cooperate with the buyer and try to get the ads to work better to improve the likelihood of conversion. Some things are in their control – they can choose where to place the ad, when, what sub-segment of audience to target and so on, and if they are smart or have a very targeted audience they can sometimes make a lot more money than they could in the CPM case. But it takes work, and all-too often the incentives for the advertiser to care and make things work better are not there.

Run display ads with one of the big CPA networks. What do you see? Awesome Flash-based ads with great production values? No. More often it is crappy JPG and GIF-based ads with little interactivity or pizzazz to them. Part of this is a legacy issue related to making it simple for CPA pubs to pull these creatives down onto their site but REALLY in the age of pretty-much free adserving, sub-10c/Gig CDNs and the like you’re telling me you can’t get ad tags or flash onto a publisher’s page? It’s not that these ads don’t exist – the same advertisers are running the flash-based good stuff in their own often-CPM-based ad campaigns while their poor affiliates are sitting with the second rate JPG ads. The incentives are not properly aligned.

We need a new hybrid performance-model that gives incentives for the sellers and the buyers of media to come together to make campaigns work. We’ll be sharing some of our ideas on this with the industry soon, but we encourage idea sharing from others. This also means we need to empower publishers and media sellers with tools to better match their inventory with likely performing ad campaigns in a non-black-box way (some of their insights ARE useful, but with so many CPA options out there it’s a bit overwhelming for the average site owner). BUT the first thing I’d say is if you’re an advertiser using CPA or affiliate channels, bring your best creative game AND demand and actually use data and feedback they can give you about what’s working and what’ s not. Every impression is an opportunity to gather data, and make a sale. Put the crappy JPGs to bed and build a better marketing ecosystem for yourself.