Tag Archives | CPM

Finding Disparities in Ad Rates Using the Unit Cost of Engagement

"Demand Map"

Posted by: Matt Shanahan This is the second in a series on the importance and use of unit cost of engagement in advertising. In ad-supported media, a pricing disparity is defined as an advertiser paying too much or too little for audience engagement compared to their peer advertisers. Pricing disparities are often hidden because ad rates are charged based on impression quantity (i.e., CPM pricing) which doesn’t account for actual engagement by users. Because brand recall and click-through rates are directly correlated with engagement, the unit cost of engagement (i.e., CPS pricing) can be used to uncover disparities and opportunities for digital revenue optimization. One of the easiest ways to visualize pricing disparities is to plot each ad order according to the order price and the engagement delivered for that order. The typical distribution of orders […]

Importance of Analyzing Unit Cost of Engagement in Advertising

"Demand Map for Advertising"

Posted by: Matt Shanahan For publishers, analyzing the unit cost of engagement in advertising identifies revenue optimization opportunities. In the next few blog entries, I’ll explore why and how to analyze the unit cost of engagement for ad orders. This first entry in the series addresses the following questions: What is engagement? What is the unit cost of engagement, and how is it calculated? Why is calculating unit cost important? What is engagement? For advertisers and publishers, engagement is the length of time the audience spends with media and ad. Engagement is one of the few scarce commodities on the Web. An audience member’s options for news, entertainment, socializing, purchasing, and learning are exploding, and like it or not even […]

CPS in a World of CPMs

Posted by: Matt Shanahan AdExhanger ran an op-ed piece today why to price advertising in cost per second of engagement (CPS). But how can a publisher make practical use of this metric right now given the entire market is CPM based. We have several B2B media companies taking advantage of engagement data to drive up CPMs by using the concept of CPS very simply. For the sake of this post, I’ll refer to a fictitious publisher called Acme Online. In a similar circumstance to our real customers, Acme Online is an established publisher in their market segment. Any strategies that focus on growing advertising revenue by increasing unique audience members would have payback but step function growth is unlikely. Their […]

When ARPU = RPM = CPM, Everybody Wins

Posted by: Matt Shanahan Over the past few weeks, I have been looking at ARPU in isolation. In the upcoming posts, I will examine its composition and its relation to other metrics. Revenue Per Mille (RPM) is the average revenue generated per 1,000 page views. Cost Per Mille (CPM) is the average cost of per 1,000 impressions. Both metrics are commonly used by publishers to describe their business, but rarely do they discuss them together. For example in the Demand Media S1, they discuss an $11.81 RPM for their owned and operated websites such as eHow.com, but there is no reference to CPM. Yet there is a lot to be learned by comparing input (CPM) and output (RPM). RPM is […]