One can say a lot of things about digital advertising but one thing is for sure, it’s truly a numbers game. A while ago we looked at acronyms that rule the digital advertising landscape. Back then the acronyms were related to advertisers and publishers, two important players. Today it’s time to look at another digital advertisers’ favorite: CPM.
The CPM metric can best be described as the price that advertisers pay per 1000 page impressions. The higher the CPM, the more money the publisher will earn for every 1000 page views. You see why this acronym is a rather important one.
Even though CPMs are an important metric it is a rather flaky one at the same time, and tend to fluctuate greatly. Moreover the metric has come into criticism recently, since its prices is based on amount of impressions, and therefore values quantity higher than quality. Critics highlight that measuring only impressions leaves out an important factor. This factor is engagement. Naturally this is a concern that is often highlighted on the advertiser site of the game. If an advertiser only pays based on impressions an advertiser potentially ends up paying for impressions that have never seen their ad consciously, nor even subconsciously. CPM only gives insights into how many see an ad but not about their level of engagement. You for example, you are part of a CPM when you read content online. Yes, you are pretty much one millionth of a CPM. But do you see the ads that are served on various sites? Did this post come with a picture? Which ad was in the picture? Did you click the ad? By thinking about our own online behavior we gain insights into the shortcomings of CPM as a measurement model.
Related to this is something that at a first glance only seems remotely connected. The strong need to understand each impression in great detail.This means for example that it becomes important not only from which location, but also from which type of location a publisher is offering them to bid on an impression. The players are basically profilers that gather all the information about a single impression (or user) and create a profile. They know where he went and what kind of products he is interested in. This might sound creepy at first, but is important to know if we want to offer a relevant service for the consumer and increase viewability at the same time. And this is where we come full circle back to where we started: CPM.
In order for publishers to earn better CPMs it is important that each of the impressions are profiled and understood in order for advertisers to offer their services for consumers with the highest interest. This in the end creates a win-win-win situation that we so love. In fact it’s pretty much like buying shoes. One can either buy a million cheap shoes or less and more expensive shoes. Chances are the more expensive shoes will last longer. What do you think? Will impression quality be the dominant force in digital advertising?
