Caveat Emptor: The Mysterious Frequency Cap Rip-Off

Do you know what a frequency cap is?

No, it’s not something you wear to the Frequencies game.

It’s probably the reason your last media buy was a rip-off, at least if you want to make sales like the rest of the dot-com survivors.

A frequency cap refers to the number of times a unique visitor sees your ad. If you buy 100,000 impressions on a site and set a frequency cap of one, it should mean that each visitor to the site sees your ad one time in the course of a day. If you buy pop-under ads at a site (see my X10 article for background on pops), it’s important to maximize the value of your buy and to make sure you don’t annoy visitors.

More Impressions Equal Less Value

When you buy impressions in cost-per-thousand (CPM) deal or negotiate hybrid ad deals with your affiliate program (part CPM, part payment per action), the number of times your ad is seen can affect the value of your marketing campaign (even more so with email).

Consider this true story:

A media buyer negotiates with DoubleClick to buy pop-under impressions with a frequency cap of one. Through special tracking software, the media buyer discovers that 40 percent of the impressions are repeats, meaning 40 percent of visitors saw the ad twice.

The campaign goal is to convert a specific number of unique visitors with an ad. Since these are pops, it is especially important not to annoy the audience. The media buyer needs maximum value from this buy. The frequency cap ensures that unique visitors see the ad.

The media buyer learns that DoubleClick agreed to a frequency cap of 30 per month, which the buyer assumed to be one per day. Wrong. A 30-per-month frequency cap can happen in a few days — or over the course of a whole month.

The projections, based on unique visitors, had to be reduced 40 percent. Only 60 percent of unique visitors targeted saw the ad. The numbers have to be adapted, because instead of unique users you get the same users seeing the ad twice. This is not a branding campaign, so that’s bad news. In other words, say we’re buying 1 million unique impressions. What we actually get is 600,000 unique impressions (and unique visitors) and 400,000 repeat impressions. This dramatically impacts the numbers.

This story illustrates continuing problems in buying impressions. For affiliate programs, it is even trickier. Large-cap-traffic sites — which throw the masses at affiliate advertisements to generate volumes of sales and leads — create costs for affiliate program managers.

If you pay for 100 percent of your impressions and 40 percent are repeats, your affiliate program, media buy, or both will suffer. With a frequency cap of one, you could cut the number of repeat impressions delivered and reduce serving costs.

Frequency caps can help you limit the avalanche of impressions affiliates can generate and help you focus on specific customers.

A branding campaign doesn’t require a frequency cap. You want people to see your message repeatedly, which is fine. But if you are doing affiliate programs or trying to make sales, it’s smart to measure unique visitors viewing one impression per day. You’ll get the message in front of more eyeballs.

The whole issue of impressions and what they really mean is a subject for another article. If you are buying media, your frequency cap will become the center of your universe.

Let’s look at an email example.

Less Is More

With email, the impression problem is reversed. You pay for more impressions when a limited number of people open the message (only HTML emails can be tracked for open rates. Text and AOL emails are a guess).

Instead of getting too many impressions, as with pops, with email you often get too few impressions. Here’s an example:

An affiliate sends an email to 1 million users. About 250,000 open it. That’s a 25 percent open rate, huge for a marketing email. (Lists that are over-emailed see much lower figures.) Over three percent click, and the message generates $4,000 in sales.

If you measure effective CPM (see “Bridging the Gap Between Affiliate Programs and CPM ” for a definition) based on the entire list, it’s about $4. If you measure the effective CPM from the number of opened messages, the CPM is closer to $12.

What would you rather pay, $4 CPM for an email 75 percent of people don’t open or $12 CPM for those that do open the message, that is, the actual impressions?

Remember that as an affiliate manager, you pay for impressions only. Therefore, you only pay for opened HTML email (we’re assuming that there are graphics in the email). If you went to buy this on a CPM basis, you’d actually pay for the entire list and bet on the open rate.

The next time you hear someone selling a marketing promotion to a special, targeted list for $120 CPM ($0.12 a name), do the math. You’re paying for the entire list. If you measure by impression, you’re being ripped off. You are paying for names, when you should be paying for impressions.

For pops, a frequency cap is absolutely essential. Too few people request it. With email, the reverse frequency cap is a real challenge. You should only pay for real impressions.

Either way, it’s better you know what you want to get in terms of impressions. If you leave it up to chance, you are paying for wasted ad space.

In my network, we insist on a minimum of a one-per-day view of a specific ad, and as little as once a week to really continue to find new visitors.

Consider this method, especially with pops. Many ad networks will compensate by overdelivering the number of unique visitors, so you’ll basically get repeat impressions for free.

But if you don’t think about it, you will get screwed.

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