How CPM rates are calculated & how your traffic affects your CPM
What is CPM?
CPM is an acronym from Cost Per Mille (cost per 1000). CPM is a cost that an advertiser is willing to pay per 1000 impressions. One impression, as you may already know, is equal to one loading of an ad format (f.e. banner) on a user's device.
For advertisers, CPM means spendings on ad impressions. For publishers, it means at what price publishers sell their traffic, which is crucial to the publisher’s profit.
The CPM rate for publishers depends highly on two factors tangled in a tight knot:
- The price at which Adsterra advertisers are ready to buy impressions on a publishers' website and how many advertisers are willing to pay it;
- Your traffic quality, which is built from loads of factors such as your audience parameters (GEO, OS, device, etc), your website general performance, seasonality, etc.
How do advertisers affect your CPM rates?
At Adsterra, advertisers can choose how exactly they will pay for ads impressions. They may choose the CPM payment when they pay for every 1000 views. Also, they can pick CPC (Cost Per Click) or CPA (Cost Per Action, such as downloads, sales, subscriptions, and others). That means they have different goals. For some of them, the number of views is a top priority, others need clicks and downloads, etc. Even if a CPM model is chosen, advertisers wait for some effect from the ads. Say, if a wellness app advertises on a CPM base, they need to reach many visitors that could become subscribers.
Advertisers monitor their "traffic sources", among which there's your website with Adsterra ad codes. So, if they reach the "goal" via your website audience — they are ready to bid a higher price for their ads to be shown on your website. But if they've paid for several thousand impressions but your website audience didn't provide them a sale or a download or any "desired action" — they'd block your website from their advertising campaign as an ineffective traffic source. As a result, your CPM might decrease.
As most of the advertisers are more willing to pay for the specific action rather than for brand awareness, provided by mere impressions, it's hard to be constantly winning their favor. Experienced publishers know that the CPM rates can vary during a day. A day! That's why publishers know how important is the second part of this formula: the traffic quality.
How does your traffic affect your CPM rates?
Just as advertisers are looking for the best-matching traffic, they also compare traffic sources. So each moment the system seeks the best match of advertiser's budget & targeting and the traffic sources (aka publishers' websites). AI-powered optimization takes into account multiple factors. Here are some of them:
— what devices your audience use,
— where they come from (GEO, country, language)
— what connection type they use (Wi-Fi, 3G)
— what OS they have (iOS, macOS, Windows, Android, Linux)
— and many others.
But after that match is found, unpredictable factors come into force. They can also be crucial for whether your website is going to perform well for an advertising campaign or not:
— GEO (not just in terms of targeting, but in terms of purchasing power for the specific region)
— User's behavior: whether they delete cookies or not, whether they intend to interact with ads or not, how they act on an advertiser's website, the depth of their sessions, etc.
— Device your audience use: whether they are ready to convert into download or purchase from their mobile devices, how the ad space is shown on mobile, etc.
— Website composition: where you put ads; what kind of ads do you use; how visible the ads are, etc.
— General agenda: topics that are trending, economical situation, seasonality (Valentine's Day or Christmas season f.e.), etc.
The human factor can be extremely hard to predict. Furthermore, as the digital world is everchanging, it's important to keep a hand on a pulse in order to be successful. Invest your time&energy at your website and be sure it will pay a tribute.
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