This is absolutely insane. The way online ad media buying is set up right now, there are so many hands in the cookie jar that it’s nearly impossible for anyone to make substantive CPM-based ad money. That’s the premise behind this excellent article at Business Insider, which takes us through the Byzantine process of online media buying (emphasis added):
“In a not-atypical scenario, a publisher may only receive $1 of a $5 cost-per-thousand media buy once all the middlemen have taken their tithes. Where does the rest go? According to an estimate from Tolman Geffs, co-president of investment bank Jordan Edmiston, it gets divided like this: The agency ($.75), ad network ($2), data provider ($0.75), ad exchange ($0.25) and the ad server ($0.25).”
You may recognize that name in there – Geffs is the former CEO of Internet Broadcasting Systems. His take on the division of money is shocking. And it’s a call for reform. There are too many middle men in this process. And the web works wonderfully at cutting out middle men. It’s also another reason why you need to be doing as much of your own selling as possible, and not based upon the CPM.
