Hey Ho, CPM Has Got to Go

January 23, 2013 Source: Ad Age

It's time to say good-bye and good riddance to the CPM, according to Ad Age's Konrad Feldman, who says that as real-time bidding (RTB) becomes a digital advertising mainstay, the focus should turn to value, not cost.

With RTB, advertising is sold on an impression-by-impression basis; and, as such, a single impression carries 'a unique value and a unique cost,' Feldman says. In other words, impressions, and consumers, are not made equal. But, how can online advertisers deliver better impressions?

By focusing on its value, Feldman argues. Moving from a CPM-based model to a CPA, or Cost Per Action, model allows advertisers to better target ads and deliver on performance goals, all while not skimping on potential impressions by CPM spending caps. And, with impression-by-impression delivery, RTB is equipped to evaluate the actionable value of an impression.

But, even with RTB, advertisers continue to focus on cost.

“Too many RTB buyers focus on cost, set a CPM cap on their bids, and then miss many valuable impressions that could deliver a strong CPA,” Feldman said.

But, while RTB lays the groundwork for determining the value of impressions, several obstacles still get in the way. Foremost, it's pretty difficult to measure an impression's value when an impression is being sold in mere milliseconds. But, it's not impossible; and, with an honest advertiser-publisher relationship and better data platforms and algorithms, advertisers can better focus on delivering effective impressions.

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