Businessweek’s Jeffrey Rayport thinks he has the answer to ineffective banner campaigns:
Some companies and ad networks sell advertising based on the number of times a person clicks on an ad, a so-called cost-per-click (CPC) basis, or on the number of times a person takes another action, such as making a purchase or filling out a form. This is known as a cost-per-action (CPA) basis. Turns out, sites that sell on a CPC or CPA basis are growing pricing power and overall revenue even as the online display ad market teeters on the precipice of a bottomless chasm.
Sounds easy, right? After all, as Rayport also points out, Google relies on CPC ads, and look how successful they’ve been.
In reality, Rayport doesn’t know what the hell he’s talking about. If every publisher switched their pricing structure to CPC, it wouldn’t do anything to change the effectiveness of advertising. To the extent that it did have any effect, it would be to change incentives in a way that could hurt publishers. Read the rest of this entry »
