CPM, or cost per mile (or cost per thousand impressions), is an important factor when it comes to running an effective advertising campaign. It measures how much an advertiser pays for every 1,000 impressions their ad receives. With that in mind, it’s essential for Publishers to understand what CPM is and how to increase it.
CPM is one of the most common terms every publisher and Advertiser or Advertising Agency learns when they start getting their feet wet. It is a key metric in evaluating how the Publishers’ inventory performs and one contributor to their earnings through digital advertising.
CPM is a price advertisers bid or pays for each 1000 ad impressions.
CPM = (Total cost of ad campaign / Number of ad impressions) x 1000
For example, a Publisher sold 1M ad impressions to an Advertiser for 1000$. That makes 1$ CPM the Publisher gets. In another way, that Publisher earns 1$ for every 1000 ad impressions they sell to that same Advertiser.
There is also the term eCPM, which illustrates the publisher’s ad revenue from selling 1000 ad impressions. It stands for effective-cost-per-mille. Since each ad impression is up for bid by a number of advertisers at various CPMs; the price isn’t set. Hence, eCPM is how much ad revenue the publisher has generated on average from 1000 ad impressions. It is calculated like so:
eCPM = (Total ad revenue / Total ad impressions) x 1000
Reasons for poor CPM:
1. Seasonality or unfavorable market conditions
At the time of publication (Q1 2023), the world is facing economic headwinds that the digital advertising industry is surely affected. The situation causes a slight decline in Advertisers’ ad spending and in Publishers’ eCPM.
In addition, the average CPM may vary in different seasons of the year. Advertisers tend to spend more in the last few months of the year like in Q3 and Q4 when it’s the holiday season with many events and special days.
For example, the highest spending period for Advertisers mostly falls in December with many events and holidays – Christmas, Black Friday, Boxing Friday,… or when there is the season of football tournaments (FIFA World Cup, English Premier League,…). Additionally, Q1 is when Advertisers usually take a moment to cool down after spending their budget extensively in Q4 so it is the slow season with low CPM.
2. Low match rate
Match rate implies the percentage of ad requests that received a response from an ad source. Reasons for low match rates can be diverse. It mostly means fewer available users to target, which eventually affects converters and Publishers’ revenue.
3. Traffic quality
Traffic quality is evaluated based on several factors.
First, the mobile game/app or website can be developed and targeted in different countries which will bring different levels of traffic quality. Typically, the traffic coming from highly developed countries namely USA, UK, and Canada,… is seen as high-quality traffic since the population tends to spend more and it is stricter in content censorship; second-tier GEOs bring medium-quality traffic are countries like Spain, South Korea, Brazil,… If a game/app or website has a low average CPM over time, it can be that most of its traffic is coming from Tier 3 countries – India, Laos, Sri Lanka,… CPM in tier-3 countries tends to be the lowest since these countries though easy to convert, have the lowest payout.
Second, high bounce rate – a large percentage of visitors land on a website and without moving on to another page, quickly exit the website in just a few seconds. The high percentage shows the content or gameplay doesn’t meet the visitor’s or users’ intention. The less time a user spends on the game, the lower CPM the Publisher gets.
Third, bot traffic aka bad traffic. Some Publishers like to go “below the belt” by purchasing traffic from external sources. This may increase overall traffic but these bots don’t ever interact with the ads, which means low CPM for Publishers.
4. Ad placements and formats
The user experience should be put on first above all since they are the ones to increase revenue for Publishers. Hence, flooding them with too many ads or giving them a hard time distinguishing whether a part is an ad or content will increase the bounce rate. In addition, ad formats like interstitials usually block user views and leave them no content to see. Displaying ads in high frequency brings similar results, which increase bounce rate and decrease engagement, hence lower traffic, and lower CPM.
5. Not enough or not well-suited monetization partner
For Publishers, it is recommended to integrate more than one monetization platform. One ad network or exchange integration simply does not always have enough demand to fill in a large Publisher’s inventory. This will also affect the fill rate and ultimately, revenue.
Choosing the right monetization partner is also an important element of revenue. A monetization partner who is inexperienced in AdOps, or has bad targeting features, and ad quality control can risk lower CPM.
What to do to increase CPM?
1. Header Bidding is the go-to
Header Bidding ensures the highest cost per impression for Publishers as the highest bidder wins the auction. The technology enables Publishers to sell their inventory on a per-impression basis which gives them an awareness of what their inventory is worth. Plus, observations showed that “adding just a single header bid source can increase yield by 10 percent”.
Prebid is the leading header bidding solution. Prebid.js is the top 1 header bidding platform that gets Publishers access to more than 300 demand sources and 50 analytics adapters. One small downside of Prebid is that it is technically not easy to set up and optimize. Hence, Publishers usually need a third-party partner who has a Prebid.js wrapper and understands fully how it works to yield higher ad revenue.
2. Flexible price floor corresponding with frequent tracking
The price floor does make a big impact on the inventory fill rate. Adjusting and optimizing the price floor step by step is the top strategy to improve CPM.
There will need analysts and ad ops in order to track and see the market trend. As mentioned above, there is the seasonality factor that affects the CPM. Therefore, here’s a tip that we usually give Publishers – go for a lower price floor and higher fill rate when the slow season comes.
Ultimately, frequent tracking and observation will help Publishers stabilize their income and make adequate adjustments. However, to make light work of ad ops, there’s always PremiumAds to assist from A to Z for Publishers since we have all the know-how and years of insights into the industry.
3. Make the most out of Ad Formats and Placement
As mentioned above, choosing the right ad format and placement is no joke. Some Publishers tend to overdo it and it results in a bad user experience, then higher churn, and finally low CPM. There’s a saying Publishers should always keep in mind: “Do not overdo ads!”. If Publishers follow the following cheat sheet, they’re good to go.
4. Improve Ad viewability
Increasing ad viewability is one of the first solutions to increase CPM. Publishers can start by speeding up the page load to make sure ad requests can be sent right when the user visits. Next off, go for the mobile-first web environment, since loads of people are surfing the internet on their phones, making the website compatible will lift the revenue.
5. Choose the right monetization partner
In the adtech space, it is always better to have a monetization partner rather than DIY in both acquiring demands and optimization. A monetization platform can help a Publisher lift their revenue up with ease, in exchange for a small share while the larger percentage goes to the Publisher. Working on such platforms as Google Ad Manager, Google AdMob, and Prebid,… can be a pain, let a monetization partner do that for you.
In terms of choosing the right monetization partner, there are some notable things to look for:
- Has a large pool of demand, even direct or plugged-in demand from DSPs, the more demand, the higher the match rate.
- eCPM and Fill rate should be easily accessible and comparable with the average rates of the industry.
- Has a detailed dashboard and analytic tools that come with dedicated AdOps executives.
- Optional: be a Google Certified Publishing Partner – this will ensure the credibility of the partner and their source of demand is coming from Google’s Advertisers.
PremiumAds luckily has all of the above. We strive to bring all premium demands to our well-deserved premium Publishers through our solution-delivered technology, an adept team of AdOps and devoted Account Managers. Not only PremiumAds provides the best eCPM and fill rate, but also a great experience as your monetization partner.