P&G pushes Web ad sellers to swallow low-ball rates

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Five months after convening an industry summit to figure out new ad models for the Internet, Procter & Gamble Co. is pushing a model of its own: a $5 cost per thousand, take it or leave it, according to executives who have heard the pitch.

The low-ball rate compares with an average $36 CPM for Web buys, according to ad-serving company AdKnowledge's September report.

The $5 CPM has been presented to sites by P&G's buying agency, media.com, over the past few weeks, but so far it seems most online publishers aren't buying it.

"We heard the $5 CPM request and graciously declined," said one new-media executive. "They seem to want to make the Internet similar to broadcast in terms of rates."

In the media.com pitch, he said, P&G tried to equate the Internet audience with the mass broadcast audience, pushing the $5 CPM to be roughly equivalent.

Buddy Tucker, associate director-media innovations at P&G, declined to comment on the specific proposal.


"We have and will utilize a variety of pricing models to meet our objectives based on the objectives of the campaign," Mr. Tucker said.

Asked to comment on industry rumors from last fall that P&G had put on hold for five months all interactive projects not set in stone, Mr. Tucker said P&G has a "strong schedule over the coming months with an increasing level of participation of brands."

He said that includes the first online advertising for its Nyquil, Charmin, Dryel and Pert Plus brands.

It's not the first time P&G has used its marketing clout to effect change to the still nascent medium. In 1996, it revolutionized Internet ad spending by refusing to pay on a CPM basis and spearheading the cost-per-click model. The concept: Pay only for what's delivered.

Since then, as e-commerce revenue sharing, sponsorships, affinity programs and other pricing models have evolved, P&G has softened its stance, pursuing a hybrid page view/performance model.

It's current pitch for the $5 deal is that CPM pricing will simplify publisher's lives, according to another new-media executive that turned the proposal down.

"Clearly, doing something on an impression basis, or in a hybrid way, most publishers would love," the executive said. "But not at a $5 CPM. I'd love to know who accepted the deal."

Rich LeFurgy, chairman of the Internet Advertising Bureau and chairman of FAST Forward, the industry group formed at P&G's summit to develop new ad models, was not aware of the proposal.


While P&G brought together major marketers, ad agencies, Web publishers and technology companies at its FAST summit to figure out how to propel the Internet as an ad medium, it now seems to be saying it's fed up with the current return on investment.

A media executive familiar with the plan quipped, "This is the company that does FAST Forward? Sounds more like rewind to me."

Copyright January 1999, Crain Communications Inc.

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