What is a good CPM? Why cheap CPMs aren't always the best | Choozle UPFRONT
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Apr 04

What is a good CPM? Why cheap CPMs aren’t always the best

When it comes to CPMs, quantity does not always equal quality.

Now, don’t get us wrong. The value behind selling a ton of impressions for a low, low price makes sense in some situations. For instance, marketers who have a background in paid search are accustomed to keeping their costs as low as possible. However, over the past couple of years, marketers & advertisers have become significantly more educated about what you can do with programmatic technology, and expectations are higher than ever.


What is a good CPM?

We hate to say this, but there really isn’t one solid answer to this question. It depends mainly on two things: 1. What tactics you’re using, and 2. Your campaign goals.

For example, if you use contextual targeting, you might see CPMs well under $1.00. You’ll get a ton of impressions, but if you’re trying to reach engagement goals like performance or acquisition, it’s unlikely you’ll be able to hit those goals.

If there’s any expectation about how this campaign will drive your outcome, using less expensive tactics just isn’t in your best interest.

Understanding CPM

CPM, or cost per mille, is the price you pay for every 1,000 impressions.

Cost-per-thousand (CPM): A marketing term used to denote the price of 1,000 advertisement impressions on one web page. The M in CPM stands for “Mille,” derived from the Latin word for 1,000.

Read our full guide to CPMs complete with a CPM calculator.

Programmatic advertising is conducted in an auction environment called real-time bidding. The CPMs set during ad group creation serve as your base and max bids in the ad auction. Heightening the threshold for your bid parameters expands your opportunities for winning an auction. The higher your base CPM, the greater the chance that your ad will appear.

Your CPM is comprised of two costs:

  • Data CPM: The cost to utilize audience data to find targeted prospecting or look-alike audiences.
  • Media CPM: The cost-per-thousand impressions when your winning bid matches your campaign, ad group, and creative parameters.

When it comes to CPMs, think quality > quantity.

Think back to a time when you chose to purchase something a little more expensive, but of quality, over something less expensive that was lower quality. That age-old principle can be put into practice here, except you know, with digital advertising. There are several targeting options available today that are pricier, but in the long run, are going to provide more value for you and your campaign goals.

Let’s look at some comparisons.

Contextual keyword targeting vs. contextual category targeting

Contextual keyword targeting allows advertisers to target URLs based on the keywords that appear within website pages. Once keywords are selected, sites with available ad placements are scanned, the most important keywords on those pages are identified, and a probabilistic algorithm defines and categorizes the page and the impression. If the page is relevant to your selected content, you are eligible to bid on that impression. (The pricier option.)

Contextual category targeting allows advertisers to target sites that categorize themselves in a specific area or topic, such as “dogs” or “sports.” Contextual targeting does not currently have a data CPM associated with it, so only the media CPM would apply here. (The cheaper option.)

  • Contextual keyword targeting: $0.42 CPM. Contextual category targeting: free.
  • Contextual keyword, although more expensive, has a CTR of about 3X that of contextual targeting.

Although contextual category comes with no CPM, you’ll end up essentially making your money back in better CTRs with contextual keyword targeting. Truthfully, CTR is a better metric for determining ad effectiveness and true reach.

Native advertising vs. display advertising

Blending advertisements into the main content of a web page makes native advertising (the pricier option) a much more seamless way than regular display ads (the cheaper option) for customers to interact with your content.

Watch our webinar on native advertising.

  • Native is a premium creative type, and CPMs range from $4-9 depending on the additional targeting layered. Note: Native video is a Supported Service in Choozle. Learn more about those here.
  • Native advertising has a CTR of 2–3X that of display.

Much like the comparison between contextual category and contextual keyword targeting, the 2–3X higher CTR for native compared to display ads speaks for itself. More cost upfront=better results.

Connected TV vs. video advertising

Choozle offers Connected TV (The pricier option) as a part of our Supported Services that includes inventory on streaming services like ESPN, or devices like AppleTV or Roku. You can use similar targeting tactics—like data or geolocation—to serve high-quality video ads. Something to note about Connected TV versus regular video advertising (The cheaper option) is that you’re serving the ads in a much more controlled environment. This premium ad space often requires participants to pay a certain price floor or higher-priced minimum CPM.

  • Connected TV is sometimes 3–5x more expensive than a standard video placement, but the cost per completed view (CPCV) is almost always cheaper than the CPCV for video assets.
  • Video turns out CPMs of $10-15, while CPMs for Connected TV can reach up to $65+.

While certainly not the least expensive targeting tactic per-unit (upwards of $65 versus $15), Connected TV is almost guaranteed to produce a better outcome in the form of less expensive CPCVs.

At the end of the day, it’s all about reaching your campaign goals. If spending a little more up front is going to help you get there on time and in-budget, then we’d consider that a great success.

Questions about any of the tactics discussed above, like our Supported Services? Give us a shout.

About The Author

Kate Marshall is the Marketing & Communications Manager at Choozle, a programmatic advertising technology company based in Denver, CO. In her role at Choozle, Kate leads efforts in content marketing including writing for and managing the company's blog, social media, and various SEO and PR strategies. Outside of the tech world, Kate is a certified yoga instructor and uses her personal brand to get real about mental health and wellness.

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