the point of this article though, is that folks are slowly learning that CPM/CPC is completely worthless. No amount of fraud detection is going to get it under control, and when your typical click frauder can spin up 10,000 micro instances on Amazon and generate a couple of billion false "impressions" you realize that its not cost effective to try to play that game. I agree though that many people have yet to learn this lesson, especially on Facebook but it is happening.
If half of all banner ads are never seen, then that just means the cost is $10 CPM instead of $5 CPM.
Marketers then manage their budgets with this in mind.
Also, traditional display advertising (TV, Print, Radio, etc..) aren't directly measured at all. They have to go through indirect survey channels for any feedback. Yet, advertisers still use them and it has worked fine for a century+.
CPM will be fine forever. Intuitive people don't need direct measurements.
> If half of all banner ads are never seen, then that
> just means the cost is $10 CPM instead of $5 CPM.
It assumes that web sites are infinite, they are not. Delivering web pages, and processing clicks, costs CPU resources and bandwidth. A fraudster can put up a bogus web site and throw fraudulent clicks at it and steal fractions of a penny in the millions. And because it is all fake they have very low over head. But an actual web site that is putting up actual content is (hopefully) paying authors, doing research, paying license fees for images, etc.
So click fraud drives the price an advertiser is willing to pay downward since, as you point out they know what they are willing to spend to get their ads shown, and it drives the price below what a legitimate web site needs to continue operating.
Or in Facebook's case the cost of combating fraud overwhelms the price people are willing to pay for a click. Same problem.
Or Google for that matter, the fact that CPC rates have fallen over the last 5 years isn't really something they have been able to fix, and its cutting into both their operating margin and their user experience as they try to make up the revenue in "inventory".
> CPM will be fine forever. Intuitive people don't
> need direct measurements.
Come back and tell me that next year on the 1st of July. (seriously I just added a calendar item to check CPM rates in July 2016). Web advertising is either going to change or die. Since there is a lot of money involved I'm betting on change.
Aren't you conflating two things: display ads cpcs vs adwords cpcs? Despite google telling us that adwords cpcs are falling, we also know total clicks are rising and it is quite possibly a change in mix: more mobile, and more low-cost countries. Anecdotal reports from developed countries claim that high-value adwords are inventory constrained and hence prices are rising -- from kenshoo etc.
