3rd part – CPM or CPC, the first tough decision in RTB models

– Conclusion – 

How CPC and CPM compete in general?

When CPC and CPM campaigns compete for the same Ad placement, the two types of ads are compared against each other on how much they’re effectively willing to pay for the impression. With a CPC model, first, you need to determine the eCPM after the first casting period in order to know how it will compete against CPM. On the other hand, a CPM model depends on the maximum bid amount that you are willing to pay for every 1,000 impressions.

How CPC and CPM compete inside Traffic Factory?

CPC and CPM campaigns actively compete against each other based on an eCPM vs CPM inside impression and re-impression system. CPC and CPM impressions are usually displayed first, but when the re-impressions have a better eCPM/CPM, they can be displayed before some impressions and get better positions. So in both models and systems, the better your eCPM/CPM is, the higher will be your position. Always consider that the “frequency cap” can make a difference since this determines how long you want your unique user session to last. Both models have the chance of obtaining first-page view positions and the competition is equal for all campaigns.

CPC vs CPM

SYSTEM

CPC	CPM
Needs more attention on CTR / Campaigns targets / Banners with clear offers	More attention needed on Bids / Positions / High CTR Banners / Conversions
Gives a slower position evolution	Gives a faster position evolution
Can be optimized with Bid + CTR, and smart & precise target filtering	Can be optimized by tweaking with your bid and banner quality
Must include clear offers on banners	Must include very attractive banners
Better on lower spots	Good for all ad placements

How to figure out which one is the best? In every model, the Key Point is ROI. But in order to get an accurate ROI analysis, it’s important to first optimize banners, campaigns and landing pages based on the chosen bidding model. 1- Determine if your banners are built for very targeted clicks (CPC) or a higher click volume strategy (CPM). 2- Figure out what is the main goal of your campaign; Budget Control (CPC) or Fast Statistics & Results (CPM). 3- Make sure to include the potential of exposure as your final choice, lower exposure spots like footer or horizontal (CPC) or higher exposure like header or square (CPM). 4- Your type of offer is also a decisive factor. CPC is a better model for paid offers (memberships, content, stores, …) and CPM for free offers (trials, free subscription, …)

GOALS

CPC	CPM
Avoid creating “miss-click” banners	Mass click banners
Paid memberships / paid websites / web store	Convert free trials / Collect email addresses / branding
Long term strategies	Faster results, short term strategies
Budget control	Volume control
Less campaign management	The system is easy to understand

Tips An efficient:

• CPC banner give a clear and precise offer, mainly information based to avoid miss-clicks.

• CPM banner is very attractive and makes users want to click on them to discover what is behind it.

A good:

• CPC campaign takes advantage of target filters to only display the offer to its intended audience.

• CPM campaign takes advantage of campaign options (re-impression, reservation, custom frequency cap, display rate) to optimize the volume of traffic.

OPTIMIZATION & OPTIONS	CPC	CPM
CTR optimization
BID optimization
Daily budget control
Global budget control
Dayparting control
Frequency cap control
Re-impression control
Display rate control
Reservation

– THE END-

GLOSSARY

RTB: Real Time Bidding.

CPC: Cost Per Click.

CPM: Cost per thousand impressions or technically Cost Per Mille.

eCPM: Effective Cost Per Mille. (Ad Spend x 1000) / Ad impressions

CTR: Click-through rate (CTR) is the number of clicks per one hundred impressions.

ROI: Return On Investment. This is a value that measures the performance of your campaign and to find out how profitable your ad is. The most basic formula to ROI being: Ad Profit / Ad Cost  x 100 = ROI %