Why I Do Not Like CPM Advertising On Blogs

I have had blog networks approach me like Federated Media, etc etc to handle my advertising. They just do CPM advertising though and they take a HUGE CHUNK like 40%+.

I guess I should give you some background on how we do our advertising here.

Basically we price it monthly at a flat rate and we let the market set the prices. We are currently sold out but when a slot opens it will be more then what the previous person paid or less depending. Fortunately (or unfortunately) for us the prices have only increased since we started doing advertising over a year ago. Also we have a very low turnover rate. I think the renewal is something like 90% so I guess advertisers are getting a great ROI. Allowing the market to set the prices IMO is the way to do it. This month (May) shoemoney.com will hit a all time high taking in almost $40,000 in advertising for one month. If the rate of growth exceeds it should do a half of a million dollars in gross revenue (not profit) this year. That is pretty cool.

Ok back on point of why I do not like CPM advertising networks. CPM is cost per 1,000 impressions. Lets say you get 20$ CPM. That means if your site gets 100,000 page views (not visitors) per day you would make 2,000$ per day per adspot.

Techcrunch for instance charges 15$ CPM on the low end. But if you look at there site the ads 99% of the time from Federated Media are COMPLETELY unrelated to the content or niche. This means a bad user experience for users and also a bad ROI for advertisers. While its a quick payday for Techcrunch in the long run I feel it will hurt them. Now I know Techcrunch does do direct flat fee ads (yay!) and much like on shoemoney.com you see the same ones there over and over and over.

So even though I could make probably 20-30% more with CPM advertising networks (from what I have been offered) I just feel in the long run it will cost me more money.

On a CPM basis you are always trying to game the social networks. The average front page Digg brings in at least $3,000 (don’t forget there is more then 1 CPM running) to these sites. but I really think you have to shift the focus of your site if you want to do CPM. Also you see sites quickly turn into page viewing whores implementing all kinds of things to get you to view more pages (hot or not, voting scripts, CLICK HERE TO READ MORE, etc etc).

With direct placement flat fee advertising I will guarantee that I will continue to do the exact same thing I have always done. I have zero incentive to game social networks or to buy 3rd world crappy non converting .00001 per visit traffic.

I know people really want to get into Federated Media but I can tell you … no I promise you that they are not worth it.

EDIT: I originally in included Blog Ads in with Federated Media for CPM networks Got my blog advertising mixed up but the points still stick.