When should I be buying ads on a CPM basis?
The simple answer is: when you have enough time to shop around.
Buying ads on a CPM basis may seem like a bad idea for most ad buys, as it intuitively makes sense to only pay when someone clicks on your ad, or when someone makes a purchase because of your ad. This is not always the case however as buying on a CPM basis gives you leverage that CPC and CPA ad buys don’t.
For example, if you purchase 5,000 clicks then that is all you will get. The site(s) you purchase from will ensure you get that many clicks and no more. A high CTR on a CPC campaign like this actually saves the website money (and not you) as they are showing your ad less but getting the same amount of cash.
Conversely, if you buy 100,000 impressions and say you will purchase again if the campaign performs well, there is no limit to the number of clicks you can get. Never underestimate the power of a website or ad network trying to impress you to keep your business!
It will take some testing to find the best place to advertise, but you can likely get far more than you ever would if you were just paying for clicks, especially if you make it known that you are willing to reallocate your budget to another site for bad performance.
Note: You should be warned that as you are simply paying for quantity rather than quality, it is more than possible that you will be given many ads which appear below the fold, and which are in fact never seen by anyone. As long as your overall return on investment is good, however, this should not bother you.
How do I manage a CPM deal?
A CPM campaign should ideally be run on many sites (or across many keywords), with an increasing budget on the best CTR performers where possible. If you have a relationship with the specific sites you are advertising with, then tell them when they are under-performing and encourage them to optimise more.
CPM Formula
The CPM equation is:
Click to enlargeCPM = (Ad Spend ÷ Ad Impressions) x 1000
What CPM price should I pay?
This is a loaded question, as it depends on what you are advertising and where.
The simple answer is: use a CPC campaign and work out the eCPM you are already paying. If you can pay less than this amount, but still get the same (or more) clicks, then you are getting a good deal.
To put it in the nerdiest way possible, if you can pay a CPM less than your CPC x CTR x10 then you’re doing good:
Click to enlarge
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