Should Advertising Be Based On The Value Of The Site Or The Visitor?

from the but,-of-course... dept

Adam Penenberg’s latest column at Wired News looks at the plan someone has to do a bit of advertising arbitrage by using some tracking cookies to note that people who leave popular sites are still worth the same amount to advertisers when they go to a less popular site. In other words, if you’re at a popular site that can command high fees for advertising, and then move to a small site that commands a tiny fraction of the cost — does that make sense? You’re the same set of eyeballs, so the theory suggests that your views are equally worthwhile. That makes some sense, so, one guy has patented the idea of following where you go and continuing to advertise the higher rates at smaller sites, while splitting some of that revenue with the larger sites. Of course, it’s unclear why this is patentable. It’s really just an implementation of tracking cookies, which have been around forever. However, more importantly, it seems to be based on a misunderstanding of economics. It assumes that the value of the ads on the popular site are is the proper value of the visitor’s eyeballs on the ad. That’s not the case. The reason certain sites get higher CPMs on ads is because they’re more effective overall — whether it’s due to reach, context or placement of the ad. It’s not necessarily based on the value of the individual visitor. So, assuming this plan worked, it’s likely that the ad rates for many of these larger sites would fall — not exactly an exciting idea for them. They might be able to make some of it backup in the residual ad revenue from other sites, but it’s going to make it difficult to convince them to take part. They currently benefit from the CPM model that suggests they deserve high CPMs for having a lot of traffic. Besides, if advertisers or publishers are really concerned about the value of each individual visitor, wouldn’t they just use a cost-per-click system, which values every clicker equally, with no bias towards the site it’s on?

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Should Advertising Be Based On The Value Of The Site Or The Visitor?”

Subscribe: RSS Leave a comment
1 Comment
Boilerbob says:

This does not make sense

I agree. This is nothing more then a tracking cookie patent.

Plus the whole concept is flawed. Somebody explain supply and demand to this reporter. The idea of InfoWorld charging $102 CPM and “Site B” charging .20 CPM means advertisers value InfoWorld 500 times more then Site B. If advertising managers aren’t doing the math they are fools.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...