YAHOO! relies heavily on pageviews, commodity content and CPM or ‘cost per thousand’ selling of banner ad inventory. With online ad inventory growing everyday, that creates a glut. When ever there’s too much of something, the value goes down. Simple supply and demand principles.
Yahoo gets killed playing the ad commodity game. Too many TV, Radio and Print companies employ the same tactics.
The Wall Street Journal highlighted many sources that support what we’ve preached for many years: selling your web inventory via CPM or ad networks is bad business and turns your journalism and content into a commodity.
At Yahoo, that (CPM) rate dropped to an average $6.50 in July 2011 from $7.65 in July 2010, while at AOL, that rate dropped to an average of $7 in July 2011 from $9.45 in July 2010.
Not only have CPMs declined over the years, but the old axiom of ‘content is king’ is starting to lose it’s lustre. Unique content will always have excellent value. But if you’re just building and boasting about about page views & Facebook fans, your toast. Relying on these once useful formulas is a recipe for slowly killing your local media business.
Rob Norman; executive at WPP PLLC’s GroupM North America, told the WSJ. “Just because you have a lot (pageviews) doesn’t mean that you have something that is of distinct value.”
Take a look at the chart below from the Wall Street Journal. You’ll see why old school, web revenue tactics don’t work anymore.