Wednesday, December 13, 2006

Advertising Space Online....

In today's online media world, there are two specific types of display advertising (inventory) that advertisers buy, and publishers sell.

* Premium - This is considered high quality placement (example: Yahoo Front Page) that allows brands to advertise on pages that are relevant to their audience. These are typically web pages that advertisers feel comfortable with, and are highly trafficked, thus "premium spots." The price is for this positioning on any given page is sold by the increments of 1000 (called CPM) thus it may go for $7.00 CPM, or cost per thousand impressions. Premium inventory is GREAT to advertise on, but it does not grow as fast as the internet advertising (it is virtually static) and can be expensive for many advertisers.

* Non-Premium - This is considered -- THE REST OF THE INTERNET. Some pundits think it comprises 75% of all advertising space currently online. Remnant inventory is the advertising space that MAY NOT have the highest profile, it may not be on the front page, but it is media, and a definite media source that is growing.
Advertising Networks depend upon publishers selling them their space that the publisher themselves cannot sell. In other words, publishers send out their inventory, when they cannot monetize it themselves. As technology becomes better at identifying users and inventory -- you will see remnant media decrease -- and CPM's (costs rise) -- the better that publishers can target their space.

Here is a example of a economic breakdown on a publisher that has 500 Million Impressions per month to sell, and lets us take the example, that 25% is premium inventory -- and 75% is considered remnant, or non-premium.

* 500 Million Impressions
* 75% is remnant or 375 Million Impression
* The Value of the 375 Million impressions is 50 cents CPM (or dollar amount per thousand of impressions)
*The remnant inventory is worth -- $187,500. The site gets $187,500 for 75% of their media.

If the site could yield 72 cents CPM (instead of the 50 cents above)a difference of .22 cents -- the upside is the following:
375 million impressions at .72 cents = $270,000

A difference of $82,500. A HUGE swing up monetarily for the publisher. The positive effect can be felt in numerous ways:
1) higher revenue
2) better use of their inventory
3) less remnant inventory
4) better targeting and results for advertisers
5) a more compelling user experience.

Here is the best part of the scenario -- (and if you have read this far, you probably understand it...)-- we take on the risk to generate results for our publisher clients.

We, at LOTAME do this.
We make our clients MORE money, by providing virtually risk free technology to do all of the above....We make our money by participating in the upside -- and focusing on creating more value from our clients media -- and sharing in the win.

We call it performanced based technology, for the PUBLISHER.

Rock on.


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