A couple industry colleagues of mine have mentioned WIMI to me, the Wharton Interactive Media Initiative. WIMI's boiled-down (self-stated) goal is to better understand the effects of interactive media and to help monetize the interactive industry. This sounds to me like a theoretically great but realistically impossible objective. Kinda like having a university initiative centered around solving world peace. It's a good thought.
This recent article brings this point home. Here is the first sentence of the article: "So what's a website banner really worth?" I've heard this "issue" trying to be solved at multiple conferences too. Well, what would world peace be worth? Does anyone think they're really going to come to one answer that everyone can agree on? Frankly, such a grandiose question doesn't have one answer and the industry is worse off for trying to simplify the thought process behind it.
To address their question, advertisers that only pay on a CPA might place a $.07 CPM value on the banner, no matter where the placement occurs. Some luxury advertisers; however, pay up to $100 CPMs for the right sites. As any good salesperson knows, the right price is the highest price a customer will pay while still being very happy with their decision. Sometimes the buyer's and seller's ranges intersect, sometimes they don't.
The head-scratcher here is this. All well-run businesses know exactly what their key financial metric and goal is. For some it's profit per square foot of retail space. For some it's profit per employee. The point is, it's different for all businesses and surely they teach this at Wharton! So, what's that particular web site banner or search click worth to THAT specific advertiser? Do the math on conversions and profits and the answer is really quite simple.
