For years, fixed CPM has been the standard in digital ad-buying. This model allows advertisers to bid on impressions at a fixed cost per thousand, which is useful in some ways but limiting in others. For example, most auction-based ad platforms have prices that fluctuate day by day, hour by hour, even minute by minute, based on a whole host of factors. As such, it’s very difficult to know when you’re simply paying the best possible price, maximizing your ad budget.
A smart alternative is to use what are known as dynamic CPMs, or dCPMs for short. This model can be more beneficial because it allows advertisers to bid in real time on the impressions that are most likely to achieve the goals of their campaign. This is really the best way to take advantage of the full capabilities of programmatic ad buying.
Understanding Fixed CPMs vs. dCPMs
It’s important to remember why the fixed CPM model became so popular in the first place: To put it succinctly, CPM buying gives advertisers a guarantee of a certain number of impressions. This in turn offered advertisers some confidence as they transitioned from traditional ad buys into the digital environment. To put it another way, CPM offers convenience and certainty; advertisers can plan for a certain level of reach.
Yet, this convenience comes at a cost: Every auction-based platform works dynamically and in real time, which means prices are anything but static. A number of factors can affect pricing, including the time of day, the day of the week, website placement, and even the audience to whom the ad is served. While fixed CPM may seem like an easy way to bid on ads, then, it often means overpaying for impressions that don’t align with campaign goals.
Enter dynamic CPMs. These offer a more prudent way to buy digital ads. You can still put a budget in place, but prices change in real time—allowing the advertiser to use their advertising dollars on the impressions that matter most for their particular marketing goals. So, advertisers can focus on website visits, product purchases, or whatever else they are trying to accomplish.
Additional Value in Programmatic Buying
That’s just the tip of the iceberg. For example, advertisers know all too well that cheap inventory is often plagued by fraud and proves unhelpful in improving business results. That’s not a problem with dCPMs, where there is no advantage to serving low-quality impressions. With dCPMs, you can always focus on hitting the metrics that matter the most to you; the price either goes up or down depending on how likely it is that the impression will deliver those metrics.
This dynamism also means that, as you discover cost savings, you can reinvest that money back into your ad campaign—really getting the most out of your budget. And, dCPM-based pricing helps you to better glimpse your ad partner’s real value—not just in terms of ad delivery, but also the strategy that guides their execution: how they adjust their bidding, how they guarantee high-quality impressions, how they collect and report data, etc.
In short, the dCPM-based model provides new levels of efficiency and insight—making it a superior alternative to the fixed approach that’s been at the heart of digital ad-buying for so long now.
Programmatic Buying is the Future of Digital Advertising
To close, we’ll simply note that CPM isn’t really relevant when you’re ultimately focused on the end result—and the dynamic ad-buying model we’ve laid out here represents a smart way to be truly results-focused.
We’d love to talk with you about some of the benefits of programmatic buying, dCPM pricing, and the guidance enCOMPASS can offer. Reach out to us today and let’s chat!
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