Supply and demand are all over the news these days. Shortages of hand sanitizers, food, and masks made the world evaluate the buying and selling process. Have you ever thought about the impact of supply and demand on your ad monetization? Supply and demand create competition for ad placement and influence your CPM results.
What Is CPM?
Cost per Mille (CPM) ad campaigns, also known as “cost per thousand,” measures insights and impressions by every thousand people. An impression represents every time a person sees a specific ad, and once the total hits one thousand, the advertiser pays the website owner a fixed fee.
CPM is an industry-standard method for deciding the price for digital ads. It’s especially beneficial for advertisers who want to track how well a particular ad is performing.
Advertisers whose primary goals are to increase brand visibility and awareness typically opt for a CPM digital marketing campaign because it’s an effective way to get more people to see your content and increase your click-through rate (CTR). Like many other digital marketing metrics, CPM can’t be defined solely on a single value.
A lower CPM can indicate low-quality traffic. At the same time, a higher CPM may not automatically mean a greater return on investment. Fine-tuning your CPM strategy begins with understanding how supply and demand impact ad space.
How Do Supply and Demand Influence Ad Space?
Let’s break it down by using an advertising technique we all know and love: TV commercials.
When supply is high for ad space, like for a popular TV show that has new episodes every week, the opportunities for traffic and leads go up with the cost. There are plenty of commercial spots to go around and you’ll get a fair amount of exposure if people aren’t recording the show to watch it later.
But the costs are astronomical when the supply is limited for ad space, like the Superbowl, where only a specific number of ads can be shown. These unique events usually yield higher exposure and increased brand recognition.
When we begin thinking in terms of CPM ads, supply and demand play a similar role. Unless you have an incredibly unique business with a super niche audience, you’ll be in competition with other brands for ad space. The more people trying to advertise on a specific site, the more expensive the CPM campaign will be.
If a website only has a certain amount of ad space on a landing page and multiple entities want to advertise at the top of that page, the CPM will be higher.
For publishers, there are a few reasons why you might struggle with a lower CPM average, including:
- Privacy laws
- Ad formats and placements
- Ad density
- Content quality
- Bad traffic
The good news is that there are steps you can take to optimize your CPM results.
How to Maximize Your Results with CPM
Like everything else in advertising and ad monetization, you must be incredibly specific about how you set up a CPM campaign.
If you collect first-party data to analyze your audience, you can use these metrics to evaluate the worth of your inventory. Publishers that can share audience data with buyers make their ad space more valuable because the buyers are able to tailor their ads to fit this target audience.
At the same time, you’ll provide your site browsers with a better overall experience because they’ll get to see ads that are relevant to them. The more information you have, the higher the CPM you’ll be able to get from advertisers.
When used correctly, header bidding can help publishers boost their CPM. Header bidding is extremely technical, and many publishers choose to partner with an ad network to ensure a seamless deployment.
Choosing the right format for your ad spaces is crucial for an optimal CPM. As a publisher, you want to look at your website from the user’s perspective. You can play around with banner ads, native ads, and rich media ads like video ads to see which will perform the best.
Goals – Exposure vs. Leads
It is vital to understand whether an advertiser’s goal is to increase their exposure or generate more leads. Different ad placements and formats cater to achieving different goals. The style of ad and total CPM will vary based on the goal for the campaign, so make sure you are clear about what you want to achieve before creating the ads.
How often people must see an ad to reach a goal significantly impacts CPM. Ad viewability represents how many people will see an ad. Increasing ad viewability and frequency reinforces the action that you want the person to take every time they see the ad. Even if your goal is only to get brand exposure and recognition, you need to be aware of the ad frequency to know when you have reached your goal.
Optimizing Ad Monetization
To improve ad viewability, you can fix the page load speed to ensure ads load faster, so the viewer has time to generate an impression of the brand or product. You can also optimize your webpage for a mobile-first web environment since many consumers are browsing on their phones instead of on their laptops. Performing A/B tests is an efficient way to play around with ad placement to see which will get the highest number of impressions.
Using a Tool for CPM Ad Monetization
Trying to figure out the ins and outs of optimizing your CPM is complicated and comes with a significant learning curve. The best way to maximize your return on your investment for CPM ads is to partner with a third-party team that understands the formula for optimizing ad prices.
Your full ad management service should come with expert support from specialists who are there to answer any questions you have and seek out new avenues for ad monetization on your site. Working with an ad manager also gives you direct access to every major supply exchange and SSP. Your ad specialist will ensure you get the right partners to have a competitive auction and will tailor the technical setup for you, so you don’t have to worry about maintenance and optimization.