Ad Networks

A Deeper Look Into NAI's Finding: BT Prices Double That of Non-BT Ads

Posted by Jay Friedman on April 1st, 2010 at 12:00 am

ClickZ just published results from an NAI study saying that BT ads cost more than double that of non-BT ads.  $4.12 CPM vs. a $1.98 CPM to be exact.  They also showed conversion rates being more than double.  However, there is more behind this story doesn't tell than it does.  Here's a deeper look.

First, let's first start at the $1.98 CPM.  Unfortunately this average includes all the $.25 inventory currently being resold over and over on the you-know-what-exchange-I'm-talking-about. Even if you're a brand advertiser with direct response goals, it's unlikely inventory sold to you at $1.98 is what you really want. Simultaneously it's important to know that true quality publishers (premium as defined by some) don't sell their unsold inventory for much less than $2.  The message here is if you are seeing a site list with a ton of great sites but paying $2, you are most likely not running any reasonable amount of impressions on those great sites.  Thankfully, companies like DoubleVerify and Adometry have become part of the network scene and can provide advertisers a clearer view into what is really occurring so they can make sound decisions on different price points within a network.

As for the $4.12 average BT price, this appears to be more in line with the value advertisers should expect to receive.  Most quality BT will be priced higher, but at a $4.12 CPM you are probably at the very least getting real BT.  Advertisers should be cautious about purchasing BT in the $2 or $3 dollar range.  The cost of cookie stamps can be at or over $2.  Even in-house BT data has a price, and while it may be lower, the internal costs to administer those relationships factor in such that at least $1.50 wouldn't be out of range.  Then add good inventory nearing $2, and either the seller is acting as a non-profit or they're delivering a mix of BT and non-BT but selling it as 100% BT. This is hard to check since companies like Adometry and DoubleVerify have not launched products enabling BT verification as of yet but you can be sure it will come. When this does happen we'll likely see the average price of BT, as reported here, rise a bit as companies will have to fully comply.

Traditional media is all about getting the lowest rate for a highest valued desired position. Online media works that way for guaranteed inventory but with more than 50% of all display being sold through non-guaranteed positions, it works in the opposite way. Because the inventory is on an auction system, higher-priced bidding actually secures better inventory.  Consider this as you "negotiate hard" with vendors. Acquiring your inventory at a value-oriented price is good so long as the value doesn't appear so good that the reality is that the quality of the inventory is no longer desirable.

Leave a comment