TechCrunch has some great coverage of JP Morgan’s “Nothing But Net” paper released today. There is one piece of data I think is wrong. They show RPMs increasing to $2.24. RPM is the total revenue for all ads on a page. So if a page has three ads, and a person pays $1 CPM, then for every thousand page views the RPM is $3. I think it’s going to be difficult to grow RPMs and CPMs when pageviews continue to grow so quickly. Most likely is a decrease in CPMs, but substantially more money because the volume of PVs per user is increasing, especially on social networking sites.
My feeling is there is a tidal wave of dollars that want to find their way online, but they just don’t know how to yet. They need help. And, as one VC told me, the Net’s a Bitch, when referring to how many good services have to go free. I think this decrease in cost of doing business on the net will have to be passed on to the people spending the dollars. This reminds me of a post by one of the papers about trading 1000s of dollars in print for cents online. Anyway, the point is the cost of selling ads online needs to be adjusted for the net. I think it most likely means a change in the way online media is sold. Self service systems work for some things, but to really get the money moving, new techniques that reduce cost, but have elements of traditional media sales need to be developed.
