The rise of programmatic has led to improvements in reach and efficiency within the digital ad space, but it’s also had some notable side effects, including the growing tendency for marketers to oversimplify their media buys.
When strategizing an ad buy, marketers should consider diversifying their pricing models in a way that accommodates a greater portion of the sales funnel.
Although programmatic allows for variety in pricing, the vast majority of buys today are made on a strict CPM basis. And that makes sense, given programmatic’s superpowers in driving reach and top-of-funnel awareness.
Yes, awareness is vital, and impressions are wonderful. But CPM is not enough on its own. Marketers also need to incorporate more-diversified models into their media buys more frequently: cost-per-engagement (CPE), cost-per-click (CPC), cost-per-interaction (CPI), etc.
Why Actions Matter
When marketers rely too heavily on CPMs, they risk neglecting the ultimate goal of their efforts: to engage and convert consumers. By diversifying media strategies to include CPE, CPC and other models, they can better align their buys to their KPIs.
Mass awareness is typically among the goals of a campaign, and buys based on CPM can certainly deliver there. But as a consumer moves further down the funnel, additional impressions tend to become less meaningful. What does become meaningful are brand interactions with prospects, be it a coupon download or time spent engaging with a rich media unit.
Furthermore, brands today are investing significant resources in creating immersive ad units, including augmented reality experiences, 360-degree video units and more.
Out of respect for the consumer, many of these units are designed to be user-initiated, meaning consumers must take an action to launch the experience. Mere impressions of these units have little value to an advertiser. So doesn’t it make sense to only pay when an impression leads to a willful consumer engagement?
The Myriad Applications of Engagement
The pricing model a brand chooses should be based on the ad unit and the intended audience action. Sometimes, a simple click (CPC) is sufficient if it means consumers are signifying that they want to visit your site or a store locator.
When it comes to an interactive ad experience, like units featuring augmented reality or a mini-game, the measure of engagement should reflect time spent in-unit with the brand and its messaging. Other engagement measures include entering an email address or phone number into an ad unit to have further communication from the brand. In short, any action that promotes a secondary touchpoint with a brand can translate nicely to a non-CPM model.
Finally, it’s worth noting that alternate pricing models aren’t applicable only to performance marketing campaigns. These models can and should have a prominent role in branding and awareness campaigns as well. This is particularly true when it comes to products that require a high degree of education prior to purchase. Creating engaging units that fuel such education is a smart way to promote complicated products, and such ad units prove particularly effective when purchased on a CPE basis.
Marketers who want to connect meaningfully with prospects in this increasingly customer-centric world need to be focusing more on engagement. While CPM buys can, and will, continue to play a role in achieving awareness at scale, thoughtful incorporation of alternate models into the marketing mix will help marketers better achieve their varied KPIs.