How To Deal with Election-Year CPM Increases in 2024

(1:1 between CMO and CEO re: softer-than-expected January and larger than expected jump in CPMs this election season)

CEO: what's going on right now? why is jan trending so differently than even our low scenario?

CMO: a few things, but it all harkens back to what I've been telling you about the importance of us building our resilient revenue base, even if it means our blended Return on Ad Spend or Marketing Efficiency Ratio goes down in the short term.

CEO: so what are you seeing?

CMO: you're not going to believe this, but our CPMs have jumped 25%.

CEO: what?! how is that possible?

CMO: last election year in 2020 was, as you know, a total anomaly, so we couldn't identify the change among the cacophony of COVID and the massive pullforward of demand we started seeing as election ads really started to ramp up.

CEO: makes sense. all bets were off in 2020.

CMO: exactly, and, we were so small in 2016 that the CPM impact was imperceptible as well. so this is largely uncharted territory for us right now.

CEO: i detest the feeling of being existentially beholden to a 'toll road' where the price to pass can change massively, seemingly overnight.

CMO: yes, and couple that with the higher-than-expected demand headwinds we're seeing, I'm starting to re-evaluate how we best position ourselves in 2024.

CEO: i'm starting to think similarly.

CMO: here's what i'm seeing: i project forward these CPMs and built in a 2% increase each quarter. Then, I layered that, and our demand headwinds into our model: it's looking like we need to start evaluating two things: a) the earliest inventory buys we can impact, but also b) strategic shifts we want to start making so we're not at the mercy of the ad platforms to the degree we currently are.

CEO: yea - we need to figure this out. all your yammering on about the real meaning of building our 'brand' meaning getting an understanding of, and increasing, the resilient baseline revenue we're getting from owned and organic (unpaid) traffic sources is finally starting to click for me.

CMO: yea, it's not a nice to have.

CEO: here's where i'm confused - does this 'unpaid' revenue come without us having to spend any dollars? if so, that seems impossible, and not something we can allocate people, time, and focus to. i don't even know how we'd create a quantifiable goal for someone to own.

CMO: no. it means we spend dollars in a way where the purchase does not happen when someone clicks our ad, it happens because we've impacted the way people think to the degree that when they are in-market for our product, they subconsciously choose our brand. this then shows up in our metrics as increased revenue from people who search for our brand or come directly to our site.

CEO: well when you put it that way, it makes sense. and the KPI is clear, so let's allocate 100% of a person's time to owning this as a first step, and we'll act quickly to increase focus and investment as we learn more.