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Google Moving To CPM: Not a Surprise

posted by Rok Hrastnik in Real-life Marketing Experience

Today's reports that Google is beta testing the CPM (cost-per-impression) ad model should come as no surprise. Every "traditional" web media is doing it, so why not Google?

For now it seems that the CPM model is only going to be limited to ad campaigns targeting specific sites, giving advertisers the choice of where (Google's network of ad partners and not on Google's search results) their ads appear, for the first time.

The new program should provide advertisers with more "direct" ad placement relevance, while at the same time putting more of the risk on them.

But what if this is only a test for Google to see whether the CPM model might also work for Google AdWords and Google AdSense as a whole ... as a substitute for the cost-per-click model?

It could make sense for Google, since they could then stop relying on how well advertisers write their ads, but would rather generate an income selling exactly what they own --- their ad space --- and not something they in fact have little control over (clicks).

In the end, it's a mathematical decision, and I'm certain that Google is doing their math.

One also needs to wonder how this is related to Google's recent acquisition of the web analytics provider Urchin, since the CPM model does require better tracking, analysis and reporting, if the advertiser is to "see" the return-on-investment cleary enough.

CPM is a whole different ball game than CPC, not providing tangible metrics to evaluate campaigns, but rather involving brand metrics in to the game ... which of course are never tangible enough.

As a direct marketer I don't really care. In the end it's all about the math and in many cases the CPM model is much less expensive than the CPC model.

As for Google, we'll just have to wait and see.

And some, such as Jeff Molander, are feeling all 1997 again:

"This isn't a complete depature from click-based revenue generation... this is merely an additional option for publishers who can chose to play in "categorical" CPM, CPC or both. What's more, this change stretches across AdSense, Adwords and even the company's new image-based network. Google Product Management Director Susan Wojcicki says, "Now our system takes things very literally. If you are on a wine site, we show ads for wine. Now we will let you advertise your cheese on wine sites."

Reports indicate that the company will open up CPM advertising as early as today. Will the competition follow and if so when? Are they as well positioned to do so and what will become of the term "performance advertising?" Will CPM somehow be sucked into this realm? I'm feeling very 1997 all of a sudden!"