(Originally published in ClickZ, September, 2004)
One of our industry’s big problems is the lack of a good predictor of media availability, or media forecasting. This comes back to the stubborn issue of inventory control, which forecasts media availability for publishers’ sales groups.
Yes, a few companies claim new, more effective methods of inventory control and forecasting, notablySolbright and CheckM8. But the complexity of inventory control and forecasting is increasing all the time, mostly because there are too many methods of buying media on the same Web sites.
Ari Rosenberg, a media sales consultant, and I recently had this conversation, as I’ve had with a number of media planners/buyers over the years. Let’s first look at the ways media can be bought today:
- CPM. Cost per thousand impressions
- Frequency-capped CPM. CPM with frequency caps applied to limit frequency on unique users
- Geotargeted CPM. CPM limited to unique users within specific geographic areas
- Dayparted CPM. CPM limited to specific dayparts
- CPC. Cost per click
- CPA. Cost per acquisition
- Behaviorally targeted media. Buy impressions displayed to specific users based on their profile
- Surround sessions. Buy impressions around a specific user that follow them around the site
- Fixed locations. Unlimited buy impressions in one specific placement on a site
If only one method of selling were used on a site, the inventory control problem would remain complex but manageable. Unfortunately, most sites are forced to accept multiple, if not all, types of buys. This results in chaos when forecasting available inventory for the sales team. No one wins if inventory forecasts are wrong.
Rosenberg’s concerned that in CPM, the prevalent method of selling inventory, media value isn’t tied to audience size. CPM prices are fixed, regardless how big the audience is. And a bigger audience doesn’t necessarily convert equally to a number of impressions, as some users visit many pages and others visit few.
Using Percentage of Audience
Let’s move to selling and buying online media by percentage of audience as the baseline. This would be a far more predictable method of selling and buying, as the exact number of impressions wouldn’t be calculated ahead of time. If there’s one thing sites can predict relatively reliably, it’s the number of unique visitors they can expect over a specific period.
No, the numbers won’t be exact. But that shouldn’t stop us from going this way. Many other media are bought and sold without precise control over how many people will be reached. We could even refine it a bit for more control, like buying a percent of audience with a frequency cap.
Here’s what the world would look like when buying a percentage of a site’s audience:
- A publisher’s rate card would list the average number of unique visitors to the site over specific periods: quarterly, monthly, weekly, daily, even dayparts. It’d back this up with unique visitor numbers for recent periods so media buyers could verify the likelihood their goals would be met.
- The publisher would set a value for its audience, based on the number of unique visitors, their demographics, the type of activity (conversions) driven historically, and other factors. The media buyer and publisher would negotiate the type of buy desired based on the average audience size for whatever period they desire.
- Additional desired-audience tweaking by the media buyer would be applied to the model, including things such as geodata, dayparting, frequency capping, and so forth. Each additional targeting level would increase the price. In this scenario, frequency-capped visitors would actually be a preferred selling method for publishers; it would increase available inventory. Of course, this works just as well with behavioral targeting, as it’s also audience-based.
- Both parties agree to a threshold. If audience size is outside a certain percentage of the average, a makegood can be negotiated ahead of time. These thresholds must be clear and appropriate.
This method of selling may not be the best solution for all sites, particularly those that sell CPC and CPA media. But it would solve a lot of problems. It’s a great idea for sites that typically sell out or ones that frequently overcommit inventory and sell more impressions than they can deliver.
Hey, I’m not a media buyer or seller. But I do know one thing: The current system isn’t very good. It’s time for industry leaders to start kicking around some new ideas.