Today people involved in AdTech use CPM (Cost Per Thousand) as a type of currency for the business of buying advertising space. Recently, advertisers and agencies have even gone so far as to coin CPM as a term for making deals with publishers. How did this seemingly benign term in the AdTech industry become so notable and integral to the programmatic advertising space? Here are three major milestones in CPM’s journey that have made it the go-to service and phrase for everyone in the media buying world today.
Markets
Let’s begin with programmatic ad buying. Companies like Google and Facebook implemented new measurements and tools to give advertisers the ability to look at the value of each impression (CPM) for their own business objectives. Because of these new measurements, they were then forced to take proper risk mitigations in order to prevent fraud, and this imposed new metrics on advertisers. From lead generation to acquisition and retention, Facebook and Google took it upon themselves to invest in ad spaces that showed a positive return on investment (ROI), utilizing CPM to do so.
The outcome was the rise of Cost Per Install (CPI) and Cost Per Action (CPA) networks, which bridged the gaps between agencies that had taken it upon themselves to manually buy media and those that chose to automate the process by using algorithm-based buying tools.
Scaling
Since 2014, mobile advertising has flourished and shown great projections, hitting all Quarterlies on Quarter (Q on Q). However, with this boom, a higher risk of fraudulent incidents developed. Many advertisers, seeking more activity on their sites, inflated their budgets to feed the networks and publishers due to the increased demand. The demand increase forced mobile advertisers to provide many more impressions, clicks, and downloads than usual. They sought to do so by using bots, malware, and many other forms of deception to trick the system. Using these dishonest forms was highly unethical and needed to be corrected immediately. And that is exactly what happened, companies worked to improve their measurements and metrics.
Performance
Soon after the unethical inflation of their impressions, many advertisers worked to improve their users’ funnel metrics by adding tools and indicators for their customers’ journeys. Advertisers were now able to pull out sources from the system and pinpoint those that were neglecting to provide the minimum requirements of transparency and brand safety. Advertisers were also pushing hard on adding third party tools to assist in identifying rogue behavior and shady supply sources that purposely gave false impressions and inflated budgets.
The entire market came to the same conclusion: CPM has to count and account for everyone and everything in the advertising chain. Although everyone in the market has arrived at this point, they have done so from different angles and for different reasons. Publishers came to it by having to adjust the way they screen their traffic, exchangers by having to add monitoring tools, and networks by having to fight for brand safety so to as to safeguard against fraudulent publishers.
The valuable lesson learned was that to secure the future of programmatic advertising, everyone needs to stay on track, remain ethical, keep moving above board and moving forward. CPM is the current standard of measuring excellence in the programmatic advertising space, who knows what’s next?
About the Author
Yoav Oz is the Co-Founder of Spotad. Yoav was previously a manager at a private advertising technology incubator and the Director of the LaunchPad Entrepreneurial Program at Tel Aviv. His latest venture, Spotad, is a leading AI, mobile advertising technology startup, that is the first Western demand-side platform to enter China, connecting clients to both Eastern and Western ad-exchanges. Utilizing an advanced machine-learning AI, Spotad enables businesses to bring their own algorithms and data to the programmatic advertising space. The company boasts impressive clients that include Uber, Expedia, Apple Music, OpenTable, Trainline and others.
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