When should I be selling ads on a CPM basis?
The simple answer is: if you are getting a reasonable amount of money for your inventory.
Selling ads on a CPM basis is advantageous to website owners as you can then guarantee the revenue for a certain amount of ad impressions. It makes sense to sell ads on a CPM basis if:
- You have a lot of inventory, but not much capability to optimise ad campaigns
- You have premium inventory, and customers will pay for the privilege of being on your site (Brand advertising)
In the first case, you can expect a very low CPM as you are literally just dumping your inventory on the market. In the second case, you could expect a quite high CPM, but only if your inventory lives up to the hype and performs well.
In all cases, it makes sense to try and optimise ad campaigns on your site (ie do what you can to improve CTR) as that will increase the CPM value of your inventory.
How do I run a CPM campaign?
You can just set up a CPM campaign and let it run if you like. All that you are guaranteeing in most cases is a certain amount of inventory, so you don’t actually have to do anything to it if you don’t want to. You should probably try and optimise the campaign at least a little if you want repeat business, however, but it’s up to you.
You should, however, make sure to not oversell your inventory. If you strike a deal where you guarantee a certain amount of impressions, then you should make sure it is no more than about 80% of your predicted impressions. Whatever is leftover, you should fill with a remnant network.
This is because the only major way to mess up a CPM deal is to under-deliver, so 80% is usually the maximum safe amount you can sell. If your ad server doesn’t predict impressions, then your best bet is to base your predictions on what was delivered the month before.
If you sell a deal with a frequency cap on it, this reduces your available impressions a lot more. It’s very difficult to work out how many you are left with (the only completely foolproof way to really work out the amount your site can take with a frequency cap is by trial and error, unfortunately).
CPM Formula
The CPM equation is:
Click to enlargeCPM = (Ad Spend ÷ Ad Impressions) x 1000
Optimising CPM campaigns
As stated above, you don’t have to optimise CPM campaigns. However, it’s just good-practise to try and get the best CTR possible. This encourages repeat business as well as increases the overall value of your inventory for future deals (having better stats to use when selling just makes sense).
To optimise a CPM campaign is just the same as a CPC campaign (improving CTR), except you should probably set the frequency cap to 3/24 if your site can bear it. To improve CTR put more ads on any placements with a higher CTR and fewer ads on any placement with a lower CTR.
What CPM price should I accept?
You can work out what CPM price to sell at by starting selling your ad space with an RTB Platform such as AdSense. Whatever eCPM you get from them, sell at a CPM price ever so slightly higher than that and it will be worth your while.
If you are signing up to an ad network, they will likely tell you how much they think your inventory is worth on a CPM basis.
Again – if you are using AdSense or similar as your backup, make sure that the CPM you get from them is better than the eCPM you were already receiving.
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