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Online Advertising Articles
(October 2001)

Interep Companies to Reject CPA Business

Written by Joshua Smith - 5th October, 2001

Effective October 6th, the two major ad representation firms managed by Interep Interactive Inc. will no longer accept any cost-per-action campaigns unless there is a minimum cash guarantee made to the rep firms and the sites they represent.

This is a risky strategic move given the domination of direct-marketing players in the online ad scene, but is considered by the firm a necessary step in making marketers more accountable for their ability to convert or to otherwise monetize their campaign, rather than leaving the majority of the risk in the hands of the publisher. And though it does establish Interep's companies as specialist CPM brokers, the company is clearly betting on the assumption that this decision will stimulate a medium-long term mindset shift regarding the models that should be adopted in the online space.

Interep Interactive holds controlling interests in Winstar Interactive, Cybereps and Perfect Circle Media - all of which are to be affected to some degree by this announcement. The company is also a minority shareholder in BURST!Media, though will not extend its recommendations to that company's sales forces at this stage.

Indicating in no uncertain terms the undesirability of CPA business to the company, Winstar Interactive Media President and Interep Interactive COO John Durham stated during the announcement that "Our sites do not want this business...This is not advertising, this is outright thievery!"

Cost-per-action campaigns are online ad campaigns where the booking agency or client prefers to pay the web site (and its rep firm) only if web visitors click on a creative unit and take an action desired by the advertisers (such as clicking through to a particular web page; or requesting more information, or filling out a survey, etc.). CPM pricing (where advertisers pay a fixed sum for every one thousand people who are exposed to their online ads) is the model of choice among most online advertisers, comprising 50 percent of all deals, according to the Interactive Advertising Bureau (IAB), an industry association in New York.

"CPA campaigns hurt our clients several ways," says Mr. Durham. "They take up an incredible amount of inventory for which our clients receive no compensation and the sites have to eat ad serving costs. With these campaigns we take 100% of the risk and the rewards are few and far between. They are simply not worth our blood, sweat and tears."

In an e mail message to his sales forces earlier this week, Mr. Durham wrote "We are professionals and we should generate real dollars for our sites, for your efforts and for our companies. We will take a stand for the industry and refuse this business."

Winstar Interactive Media, a leading web property representation company that generates advertising sales, creates sponsorship and content syndication packages, and facilitates business partnership programs for a select list of branded web publishers including Fodors.com, uBid, Kiplinger.com, Entrepreneur.com, Office.com, uBid, and education.com; Cybereps, a San Francisco-based rep firm specializing in ad sales, marketing, and streaming media sales for some of the web's best content sites and networks including Totaltech.com; Future Games Network; Totalwoman.com, Reuters, SiteExperts, HowStuffWorks, Batanga and laMusica among many others.

For more discussion on this issue specifically, as well as the many facets of the ongoing debate pertaining to which transaction models are best suited to the web, check out this Geek/Talk thread.


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