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The Pros and Cons of Advertising Using a CPM Model

Insightful marketers are constantly analysing data on media spend to identify new opportunities for growth and efficiency. While traditional online buys were conducted with impression-based ad serving, there is now a stronger movement toward bespoke and performance-based models. Advanced targeting methods now make each view unique in terms of value, by choice of which hours of the day, placement and content sections. As the industry starts to shift toward newer ad distribution methods, it’s important to consider the benefits and opportunity costs of relying upon a traditional cost per impression (CPM) model.

Pros: Benefits of CPM

CPM is a clearly defined metric based upon page views and is easily understood by decision-makers. If your goal is branding to a wide audience, then CPM is a good metric in terms of how many aggregate consumers you may have reached. When reporting to management, establishing a baseline CPM level makes it easy to compare your spend against radio, broadcast and direct mail. While display advertising continues to change, many firms still rely upon CPM pricing.

Cons: Costs of CPM

In an era where marketers are held accountable for each last dollar spent, CPM models don’t reflect the intricate details of target audiences. The metric doesn’t cope with sudden increases (spikes) in usage which increase page views but have a decline in attention spans as well – the bottom line is that not each (potential) ad view has the same worth. For that reason, advertisers need to constantly monitor their traffic sources, usage levels and ad consumption, to see how the campaigns are performing.

Rather than just paying for placement, however, modern advertising relies upon cultivating an audience through conversational marketing. You want to be able to target a bespoke message and creative to the right people, as well as extending a campaign to seed your idea, product or brand over time. When solely pricing campaigns based upon impressions, the audience engagement metric is missing from the equation.

Beyond CPM: A New Model for Online Advertising

Moving beyond CPM to targeted distribution based upon custom creatives, selected placement, and time-based segmentation can vastly improve the effectiveness of online campaigns. Reaching your audience requires a combination of art and science – you need insight into the messages that stick with your prospective customers, as well as hard data on how to best target those individuals. Rather than focusing on the number of impressions you make, advertising models should be based upon the type of impression they leave the reader with.

Source by Gary Alan Young


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