Recently there have been a lot of articles regarding the decline in the popularity of CPM and Banner (read brand advertising) on the web. I think its obvious by now that the scarcity model that drove impression based pricing in TV, Radio, and Print doesn’t work on the web now because its a two-way channel that anyone can contribute to.
Surely this will continue to be unsettling for many publishers that are used to this model, but their inventory is still of value and usable with performance pricing, so there shouldn’t be too much panic on the train at this point. Advertising has finally evolved to what marketers have always sought (at least on the web): Pay for performance.

There is nothing wrong with this evolution for online media and there is a lot of money to be made (look at GOOG). If publishers can learn to live with the new rules of performance pricing and become experts in inventory management, they will learn lessons from this evolution in pricing and potentially apply it to older media channels.

If publishers are willing to evolve and admit that these pricing changes will dramatically change the model, then there can be a smooth transition. However, if they continue to try to foist old models on new media, then its going to be a multi-stop local with pain in every car.

Here are a few of those link referenced above:

Silicon Alley Insider: Online Display Ads Will Fall Sharply In 2009

Life2Beta: The slow death of CPM on the web

ClicketyClack: Thoughts On The Display Ad Market And Monetization

What do you all think?