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A Good CPM

  |  November 3, 2000   |  Comments

What's the "real" average CPM? Try $11. But don't get hung up on this. Very few buys should have a CPM of $11. Many will be less expensive, while others will be more targeted, thus, much more expensive.

I can tell you what the "real" average CPM is, and I will. But don't get hung up on this number. It's not published in anyone's research, as far as I know. There are a lot of organizations that publish a figure, but these organizations tend to be rather biased and the figures are certainly inaccurate. The average CPM, as negotiated and presented to the client, is approximately $11.

Please don't get hung up on this number. Very few of your buys should have a CPM of $11. Many should be less expensive, while others should be more targeted and much more expensive.

My Indefensible Methodology

I'm not including barter and "house ads" as a financial analyst would in assessing a site's revenues. Those added confusing factors (driving the true average much lower) are irrelevant to buyers.

My methodology, admittedly, isn't ironclad. It consists of consulting my anecdotal experience across tens of millions of dollars of online media spends and a great deal of experience dealing with the management and motivations of media buyers. As a control to my methodology, I asked some friends of mine who run large online buying agencies for a figure. None were too eager to offer their own figures, but throwing the $11 out seemed to garner more nods than head shakes. Some thought it was $9; some thought it was $12. Amusingly, all were convinced that they were getting much lower rates than everyone else.

So, why do we see much higher published numbers? They tend to come from sites that have a self-interest in having the perceived average price rather high or from organizations that largely have web sites as customers.

AdKnowledge, a fine company staffed by some very honest people, maintains that the average CPM is more than $30. But here's an uncomfortable question for AdKnowledge: Why does its methodology rely on site-reported surveys and rate cards? AdKnowledge knows the negotiated prices in many cases. Why doesn't it use those real negotiated prices as the foundation of its price tracking? Perhaps it is due to client confidentiality, but I remain dissatisfied with this answer, as the clients' figures could be aggregated together.

I don't think the folks touting the higher numbers out there are being dishonest. I just think the information they're giving out isn't very useful, given the means they've employed in its collection. They don't deserve derision, but neither do these figures deserve our attention.

Even with a CPM average of about $11, you can quite happily pay a $150 CPM and know that you are getting a good value. It all depends on two factors: demand and targeting opportunities.

Targeted Media

We can target in many, many ways today. We can hit regions, demographics, behavioral profiles, and content adjacencies. All of these will add a premium to the price. And, most times, it's worth putting some intelligent targeting on a buy. While a straight 1,000 impressions on a site might cost $10 or $15, buying that same amount of media in a specific ZIP code and limiting it to people who have recently used their American Express card will cost you $75. If you have good rationale for choosing these criteria, though, you should feel proud defending that price to a client.

High-Demand Media

Some media just can't be bought. There's just not enough media out there for some product categories, like a lot of the vertical and B2B markets, which drive the price through the roof. This isn't new, as the trade print for these very same industries generally enjoy CPMs greater than $100. Likewise, some regions, some targets, and some behavioral profiles are simply too sought after to be value priced. Again, if you have a good rationale and link to your client's objectives, you can proudly put some of these very expensive buys on your plan.

There's a great deal of pressure for an agency to appear to be giving clients deals they couldn't get at another agency. This sometimes leads to "bottom feeding," where a lot of media is purchased for little money, but perhaps with little result as well.

A typical trick agencies employ to get their campaigns' average CPMs lower is to fudge the weight levels around. They'll take 90 percent of the weight out of the $30 CPM buy and throw it into the already-huge $4 CPM buy. This way, they're able to show the premium site on the list, yet show a greater perceived value on the bottom line. This can be shortsighted, especially when the long-term evaluation of media performance will be measured by sales or leads or some other direct criterion.

Next week, I'll talk about the proper impact of a site's brand on that site's rate card. Name-brand sites might not like what I have to say, so be sure to stay tuned.

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ABOUT THE AUTHOR

Tig Tillinghast

Tig Tillinghast helped start and run some of the industry's largest interactive divisions. He started out at Leo Burnett, joined J. Walter Thompson to run its interactive division out of San Francisco, and wound up building Anderson & Lembke's interactive group as well.

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