Watered Down CPMs

I walked into a bar last night and ordered my favorite, a Captain Morgan rum and coke. “Seven dollars,” chimed Gus the bartender as he served me. What a ripoff. Captain Morgan is my favorite spiced rum, but it’s not worth its weight in gold or anything.

I reached for my wallet, but Gus must have heard me voice my disapproval under my breath. He took the drink away and poured it into an empty beer mug. Astonished, I watched as Gus topped off my drink with seltzer water. “Ten dollars,” he declared, passing my now watered-down drink back to me.

None of this made sense to me. I asked Gus if he had been tipping back a few wet ones himself. “Nope,” he explained. “That first drink I made you was seven fluid ounces. Seven bucks for a seven ounce drink is a dollar an ounce.”

I followed him so far.

“Now this new drink I gave you is 15 ounces,” Gus continued, “but I’m only charging you a lousy sawbuck. That’s 66 cents an ounce. You’re getting a great deal.”

If you were me, would you pay Gus his 10 bucks for a watered-down rum and coke? The sad thing is that if drinks were portal deals, some of you might.

I’ve seen some big Internet ad deals proposed to clients in my time. Most of them follow a simple formula:

Targeted ad views – 100,000 per month Run of Site – 6 kajillion per month Effective CPM – $3.02

You’d be surprised. Quite a few online advertisers fall for this tactic. What they don’t realize is that the kajillions of untargeted Run of Site impressions that are included are designed to “water down” the deal.

Notice how individual CPMs aren’t given for the targeted and untargeted inventory? That’s because the targeted ad views are really expensive on a CPM basis. Rather than expose themselves to a potentially nasty negotiation over the price of the targeted ad views, some reps simply dilute the deal with whatever untargeted ad views they can spare. The result? A really low effective CPM for the package.

Don’t be deceived by effective CPMs. Any deal you’re evaluating should be broken out on a granular level, so that you can easily determine what’s being paid for each placement. In the above example, you may find that you’re paying over $100 for a thousand targeted ad views, while the Run of Site is costing you $3.

Some media sellers may not want you to know what the individual CPMs are for each placement. When asked, they may tell you that the inventory comes as a package and cannot be split up. In effect, they’re saying that you can either drink the watered-down stuff, or go drink at the bar down the street.

Trouble is, if you’re going to get your money’s worth, you need to know the CPMs of the individual placements. Suppose the overall package delivers to goal during the course of the flight, but the targeted impressions fall short. You’ll need to know these CPMs so you can find out what the site owes you in makegoods at the end of the flight. And, of course, you’ll need to know these details before the deal gets signed.

Don’t settle for watered-down drinks. Always know exactly what you’re buying. And if the salesperson won’t tell you, walk away from the deal (to the bar down the street).

Related reading