With what appears to be a coming recession, no matter how small or short it might be, the first thing to be cut by companies is usually the advertising budgets. You can’t get rid of the guy making the “blue widget”, but you can cut advertising costs, especially those where you aren’t guaranteed any real return on investment.

CPM advertising is cost per mille. Mille is french for thousand, so CPM advertising is cost per thousand impressions.

Advertisers buy CPM advertisements because it can help increase their brand awareness, spread their messages, and hopefully increase their sales. This type of advertisement doesn’t guarantee any sales though. It doesn’t even guarantee any clicks to the advertisers website. All it provides is impressions.

The types of advertising that companies will want to switch to during any sort of belt tightening is both CPC and CPA. These stand for cost per click and cost per action. With cost per click, the advertiser only pays when someone clicks through to their site, and with cost per action, the advertiser only pays when the visitor has clicked through and completed the action that the advertiser wants. It could be as simple as filling out a survey, or as complex as purchasing a certain product.

These types of advertising reduce the apparent risk that advertisers have when spending money online, and will increasingly be the advertisement of choice.

As a publisher, you have to decide what will be of the best benefit to you and your readers. Do you accept the dropping CPM rates, or take what could be more or less lucrative with CPC or CPA advertisements?

It can be difficult to make the right choice, and as with everything related to publishing online, I recommend testing a variety of different methods going forward. Just be prepared for lower rates than my might have otherwise liked.

Source: GigaOM

Originally posted on January 28, 2008 @ 4:30 pm