But there is a new medium in town that is capable of side-stepping this supply phenomenon. This is good news for those who buy advertising. Remember back to Econ 101…if supply is no longer fixed, then you don’t get squeezed on pricing. This is also good for those who consume the media that is supported by advertising.

What is this new medium? Virtual worlds. This new medium is uniquely capable of integrating an advertiser’s message into their product, and in so doing, avoid the issue related to supply and inventory.

Consider Whyville.net, the “edu-tainment” virtual world for tweens. Unless you are 8-15 years old, you probably haven’t spent much time visiting this virtual world. But think of it as a virtual theme park. Every advertiser is essentially a new roller coaster or attraction for the virtual world. The site is actually enriched with each advertiser.

Scion opened up a virtual dealership and finance center. Getty put its name on a new museum. Even NASA got into the act by sponsoring the Whyville Aeronautics and Space Administration (that’s right, WASA). Sponsors ranging from Disney and Adobe to the Center for Disease Control and the Woods Hole Oceanographic Institution have sponsored destinations, activities, events, and the like inside Whyville.

Going back to our economic theory, with a virtual world such as Whyville, every advertiser produces incremental inventory (in this case, in the form of new page views). It’s like a new roller coaster opening up in our theme park example. The incremental advertiser creates incremental advertising inventory.

This is great news for the advertiser…but it’s also great news for the consumer of the media.

If every advertiser is a roller coaster, then the relationship between the advertiser and those that consume the media has fundamentally changed. Instead of being a necessary evil that subsidizes the consumer’s out-of-pocket cost, the advertisements enrich the site. Who wouldn’t want one more roller coaster in their favorite theme park?

As stated above, this is good news for the consumer. And at the same time, this is wise approach for advertisers. They side-step a seller’s market situation, and simultaneously put themselves in front of their consumers in a non-intrusive manner.

Could this be the fulfillment of the original promise made by the Internet?

Now, as we find ourselves living in a convergence culture, a “new kid on the block” has emerged (translation: new medium) that is gently challenging this model. Virtual worlds — as a medium — are capable of accommodating a form of advertising where the M in CPM becomes multi-variate. In other words, a single “ad campaign” can produce a number of different types of impressions and consumer touchpoints, both primary and secondary. Let me explain:

For example inn Whyville — a virtual world that edu-tains boys and girls ages 8-15, Toyota’s Scion brand was engaged as an automotive sponsor.. This campaign includes a 3D dealership (way cooler that what you see in the real world), a museum, a finance office, a car configurator, actively mobile cars, owners’ events and much more. The net result is the advertiser becomes immersed within the context of avatar activity, and the delivery of impressions becomes multi-varied. For example:

• A kid or (“citizen” as they are often called) in Whyville can hang out with his friends inside and outside Club Scion. That’s two different types of impressions.
• A kid can take a tour of the Scion museum, seeing virtual and real-world Scions behind velvet rope. That’s an impression (actually many, because the museum’s exhibit is rather large).
• A kid can get ambitious and check out the Scion Configurator, and custom design their own virtual Scion xB. That’s an extremely valuable impression.
• If the kid chooses to buy the Scion xB, he/she can take a ride around Whyville (and even pick up their friends). Because it is a virtual world (think video game), every place they drive, all other kids hanging out at that place see the Scion zoom across the screen. That’s an impression; actually many impressions depending on the number of kids that see the “carvatar” zoom by.
• Kids will chat about the Scions they see. Ever time a kid “chats” Scion that is an impression. And every time another kid “overhears” kids chatting about a Scion, that is an impression.
• And so on.

All told, everyday Scion gets hundreds of thousands of obvious (primary) and not-so-obvious (secondary) impressions inside Whyville. Each of these impressions is authentic, solicited, and significantly more valuable than a traditional banner ad.

This next generation, bottom-line CPM is superior because the quality and quantity of impressions exceeds what is possible with any other medium. A traditional ad (whether it is a tv commercial spot, a radio spot, a print ad, or a banner ad) is capable of making an impression, but that impression starts and stops with the ad itself. There is no echo, there are no aftershocks, no multiple consumer touch points — there is no CPM(2).