Still Clinging to Fixed CPMs? Then You’re Probably Missing Out

Like any auction-based environment, CPM prices fluctuate minute to minute based on the competitive market, seasonality, time of day, and so many other factors. So how can digital advertisers ensure they are paying the best possible price for every impression they bid on? It starts with setting up your ad campaigns to maximize programmatic’s ability to take advantage of auction mechanics. Programmatic is designed to spend your media dollars more efficiently, but only if you let it. Here’s how to ensure you don’t miss out:

Fixed CPMs vs. dCPMs

For years, fixed cost-per-thousand (CPM) pricing was the main buying model for advertising. Carried over from traditional media, fixed CPMs gave advertisers new to digital a way to estimate ad-serving costs and to guarantee a certain number of impressions – making the transition from traditional to digital media buying seem that much easier. This is because from a fixed number of impressions, you can plan for specific reach and TRP numbers, but this convenience comes at a cost. It’s simply not the most effective way to buy or measure digital media. Consider this: Every auction-based platform from AdWords to DSPs works dynamically in real time; so why shouldn’t your buying model? Dynamic CPMs (dCPMs) are native to digital advertising and give modern advertisers a better way to buy. With dCPMs, you still set a budget, but the price adjusts in real time depending on the website, placements, day, time, etc., so you can maximize your spend on the impressions that matter the most to your goal – be it website visits, purchases, etc. And that’s just the beginning …

Programmatic’s True Value

Too often, cheap inventory is fraud-ridden and won’t actually improve your business results. With a dCPM model, there is no advantage to serving to these kinds of low-quality impressions. Instead, dCPM focuses on hitting the key performance indicators (KPIs) that are most important to you by flexing the spend up or down based on the likelihood that the impression will give you the result you want, such as a conversion. This flexibility also means as the campaign progresses, you can reinvest any cost savings back into the campaign to maximize the budget. For example, if you purchase the inventory at a lower price than expected, you will receive more impressions to fulfill the budget and vice versa. Plus, dCPM pricing gives you a better view into where your partner’s true value lies – not simply in the delivery, but in the strategy behind the execution. How they adjust bids. How they ensure high-quality impressions. How they gather and analyze data to help inform your next campaign so you continue to improve month after month. Taking advantage of auction mechanics to gain efficiencies and insights like these are the real benefit of running programmatically. And they can only be fully achieved on a dCPM model.

Shifting Models

Programmatic pricing has become a hot-button conversation in the ad tech industry. As IO-based business is decreasing with more and more digital advertisers embracing a flat-fee model, they are getting access to a dedicated team, a suite of premium data products, and valuable strategy and analytics that couldn’t have been cost-effectively included on a fixed CPM plan. In many cases, these models also include performance-based bonuses for hitting certain benchmarks against campaign goals using dCPM strategies – the CPM is irrelevant when actual results are the focus. The idea is that this gives you the accountability you want from partners, and it enables programmatic experts to put more skin in the game. But no matter the partner you choose, one thing is for sure, if you continue to cling onto fixed CPMs, then you’re going to miss out on the real benefits of programmatic. Reach out to us to find out more about how you can spend your media dollars more efficiently.