Have you been basing your ad buys on “effective cost per thousand impressions,” or eCPM? The problem with using eCPM is that, while the cost may be effective, the impressions themselves aren’t necessarily so.
Wouldn’t it make more sense to use “cost per effective impressions,” or CPEM?
To arrive at the traditional eCPM, you divide total spend by total number of impressions, and them multiply by a thousand. It’s a simple average of costs.
For the new CPEM, you divide eCPM by the following: rate of correct audience times rate of correct frequency times rate of impact. It’s a method that helps you understand the real value of every impression. Here’s the actual formula:
audience x frequency x impact
Let’s break down the CPEM parameters:
o Contextual – Consumers are less likely to be interested in ad messages if their state of mind is not right. Movie previews are very appropriate when I’m in the theater, but less so when I’m working in the office on job-related research. Also, discrepancies between advertised products and the environment can create a negative effect – for example, imagine seeing a luxury car in those urinal ads found in bars. In online media, quality and context are best achieved through relevant, premium content.
o Creative -- The more senses involved, the better. Adding images, movement, sound, video and interactivity make messages stronger. Larger ads and longer duration attract more attention. Online ads below the fold that nobody sees have zero value. Standard ad units with no movement, sound or interactivity are not as strong as ads that include video, expansion units and other interactive options.
So how do you apply the right audience, the right frequency and your campaign’s impact to figure out how much an effective impression really costs? In other words, how do you find your overall CPEM?
You eliminate every impression that brings no value, such as wrong audience, wrong frequency, and ads that aren’t viewed. For example, if your CPM is $5 and 50% of the audience is outside your target audience, the CPEM is $10; similarly, if 50% of your impressions are over-frequency or under-frequency, the CPEM is also $10. What if you have both 50% audience waste and 50% frequency waste? Your CPEM jumps to $20. Add in, let’s say, a 10% rate for unviewed ads, and your CPEM becomes $22.
The challenge for marketers is to decrease the CPEM by buying and managing campaigns in a smarter manner. Always check these three factors:
The technologies in today’s digital advertising environment allow you to become very effective in controlling all these elements. Leveraging such capabilities allows every dollar you invest to work harder. In other words, less spend will get you better results.
That’s what I call effective!