Oh, Poor Us...

Is this article supposed to make me feel bad for eDiets?

These guys snatched up remnant inventory from publishers on a CPC basis during the online ad downturn and now that we're experiencing an upswing, there's less remnant inventory for them to lock up at next-to-nothing prices. In other words, their acquisition cost targets were so low that there's no place for them to go to get inventory cheaply anymore without being pre-empted.

The days of foisting every bit of risk off on publishers is over. Demand is back up, and unless a company wants to deal with sketchy spammers or tier four pop-up companies, there's no reason to expect to be able to continue "nickel a click" deals. eDiets also attributed rising acquisition costs partly to "spikes in sell-out rates, which lower the availability of 'make good' advertising inventory." In other words, their cost per click is so low it's hard for them to get a makegood on underdelivered clicks.

What some companies playing in the PPC space don't understand is that success is not all about driving your Cost Per Click down to pennies. Higher-priced inventory can actually generate new customers more cheaply if the offer is compelling enough.