Have you ever wondered how CPM can affect your ad performance?
Many marketers try to buy the cheapest impressions to meet the expectations of their customers, but is this a good strategy? Is it quantity or quality impressions that you need for success? Before we explore this topic, let’s determine the meaning of CPM for newcomers to the industry.
What is CPM?
CPM is an industry term used to describe how much it costs to show an ad on a web page. For those new to online advertising. CPM stands for “cost per mille”, which means that the advertiser will pay $X for 1,000 ad views. The actual rate depends on many different factors and can vary widely from campaign to campaign and publisher to publisher.
How do you calculate CPM in marketing?
To determine CPM, simply divide your total spend by the number of impressions.
- CPM = Total Campaign Spend ÷ Number of Impressions X 1,000.
- Total Cost of Campaign = Total Impressions ÷ 1000 x CPM.
- Total Impressions = Cost of Campaign ÷ CPM x 1,000.
For example, one advertiser might be willing to pay $10 for 1,000 ad impressions, whereas another, might only be willing to pay $2.50.
Similarly, traffic can significantly affect pricing as you generally get more bang for your buck with highly targeted traffic than general web traffic.
If an advertiser is paying $10 CPM, they will pay $10 for every 1,000 impressions their ad receives. They are charged this amount regardless of whether or not the ad is clicked or viewed by a user.
The advertiser pays the publisher each time an advertisement is displayed to a reader, showing how many times in a certain period of time an ad unit was displayed to users, also called frequency. The advertiser calculates the number of exposures generated by its campaign based on data sent by the publisher.
Where will you see the best results from CPM strategies?
Clients often see their best results from CPM strategies used in multi-layered marketing campaigns used at the top of the funnel when raising product or brand awareness and recognition.
Well planned and executed CPM strategies are highly targeted. For this reason, they are not necessarily suited to small, niche companies who wish to appeal to a small target market within a specific geo-location. One of the reasons is that it may be challenging to quantify exact spending in your marketing budget.
While planning your CPM strategy, ensure you have clearly defined your:
- The exact definition of a lead
- Specific goals for your CPM strategy
- How the CPM metric will help you measure your overall business goals
- Steps to follow up successfully on your new leads and awareness
It’s advisable to not use CPM strategies by themselves. The most positive results are typically obtained when used together with other forms of media that follow up on your leads and work on converting your new leads to new customers/clients.
Why is the CPM quality important?
You can buy more of them by paying a lower rate for a thousand views. During campaign execution, marketers often target their campaigns at lower bids, thinking they have a better offer.
Instead of educating the client and treating them as a business partner, they follow the line of least resistance to satisfy the client with high volume impressions instead of high-quality impressions. In reach-building and traffic-driving campaigns, they will report seemingly huge numbers that often go hand in hand with CTR as the main KPIs. But is that the best way to go about it?
It’s no secret that the programmatic industry is struggling with ad fraud. Dishonest publishers sell vast amounts of impressions at discounted CPM rates, and the impressions are generated by bots instead of real users. These bots give the impression that client campaigns achieve great results, and marketers can satisfy less informed clients without enacting real change.
What is a good CPM in advertising?
By using Google Analytics, you can verify the efforts of marketers. Traffic coming to your website, which has a high bounce rate (99%) and stays on your website for a short time, often for 1 second, is a sign of a sucker—bots don’t stay long on the site. By buying cheap views, you expose yourself to much more fraud, budget burnout, and other inefficiencies.
Does low CPM = higher bounce rate?
Conducting various tests in our agency, we noticed a high correlation between low CPM and high bounce rate and short visit time, even among honest publishers. During the analysis, we also saw anomalies originating from specific cities. In most cases, fraudulent traffic came from a specific city in that country.
Is a higher or lower CPM better?
By paying more for real-human impressions, of which there are fewer, we deliver less but higher quality traffic to our client’s websites, often saving their budgets. We can react quickly and cut off false traffic from your website by performing real-time verification.
How to prevent low-quality CPM?
When planning a campaign in the programmatic system, it is essential to verify that a potential publisher is not using tricks. One of the targeting methods that allows marketers to minimise fraud risk is viewability.
This is a metric that measures whether the user sees at least half of the ad on his screen for at least one whole second – then the impression is counted as visible. However, this is not a perfect solution. Publishers often use tricks to increase viewability. One example is video players that run in the full window. Ads are loaded under the video layer to be classified as visible by the platforms, so their visibility can be as high as 99% without the user noticing them.
Therefore, it is imperative to exclude dishonest publishers and create whitelists quickly based on the collected data.
Get started with your CPM strategy
To kick off a successful CPM marketing campaign for high-quality impressions we will lay a proper foundation that consists of the following three deliverables:
- In-depth knowledge of what a lead, awareness and your CPM metric must deliver to your business and marketing strategy.
- A clearly defined and separate budget for this segment of your marketing strategy.
- A plan of action for follow up and the next steps in your overall marketing strategy.
These three foundational pillars will greatly determine how you measure its success.
If you are curious about how we deal with this problem of publisher fraud and need a bit of help maintaining high-quality impressions, don’t hesitate to get in touch with us at moc.w1653753036wpuor1653753036gaide1653753036m@btr1653753036.