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  • Writer's picturePeter Brand

Cracking the Code on Better Media Buying

Updated: May 3

  • Protect Your Digital Advertising  Budget 

  • Avoid the CPM Trap


CPM MEDIA BUYING

Cost Per Thousand (CPM) is a very common way for organizations to buy digital advertising. With CPM buying, the advertiser is paying for the number of impressions the ad appears on a publisher web site.


But not all CPMs are the same and buying digital advertising with this model isn’t always in the best interest of the advertiser


Spoiler alert, the CPM model favors the publisher, ad seller or media buying agency. Not the Advertiser.


THE GOOD A good CPM buying model is when the advertiser is buying directly from a publisher.  


The price is the price and it is typically the going rate for all advertisers to have their ads featured on that publication.  In this environment, the pricing model is transparent with the publisher’s rate card revealing their menu of options.


THE BAD

When buying digital advertising in a programmatic environment, the media buyer is entering an auction/market where multiple parties are “bidding” on the impressions.  


The buyer cannot guarantee what price they are going to pay because it is a fluctuating price based upon the targeting of the audience, supply and demand.  


Therefore there is a tendency for the media buyer, agency, ad sales team to protect themselves from a potentially higher than expected price. They charge a higher CPM price to protect their down side.  


This model protects the media buyer and drives up the cost to the advertiser. 


THE REALLY BAD

The media buyer is incentivized to buy the impressions at the lowest price because they will make more money.  If the media buyer can purchase media at a lower cost it means that they make more money. 


The advertiser never knows the true cost of the impressions.


This lack of transparency creates an inherent conflict.


THE SOLUTION

A better way to buy programmatic digital advertising is a budget buy.  This is when the advertiser pays a percentage fee based upon the overall digital ad buying budget.  


Here’s an example of the math:

  • $10,000   Advertiser’s digital budget

  • ($2,500)  25% ad buyer or agency fee for services

  • $ 7,500   Real spend on buying the highest quality media

COMPARING THE CPM MODEL TO BUDGET BUYING


SUMMARY OF BUDGET BUYING ADVANTAGES

Using a sample client with a $10,000 media budget

RESOURCES


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