Is CPM Right for You?Is CPM Right for You?
If you've ever set up an advertising agreement with some website, you've likely seen or heard the term "CPM". This common term essentially stands for "Cost Per Thousand" impressions and is still widely used as a model of advertising on many web sites.
Unfortunately, many organizations don't understand the pitfalls with the CPM model and end up wasting thousands of precious ad dollars. The CPM model typically affords you very little control, little forecasting ability and is more of a gamble than a solid method of building a list, developing site traffic or increasing revenue. Why? Because you are essentially handing over dollars to a an advertising company--usually without any concrete outcomes required for the dollars spent. You are paying for your ads to be displayed on a page (any page?) a certain amount of times per week or month. You don't control who sees your ad. You don't control how many times the same person sees your ad. You don't control what other ads you are competing with. And the list goes on...
Let me be frank. In my years experience with organizations both large and small, I have never seen a CPM ad campaign work well in terms of return on investment (ROI). In fact, I would never spend my own money on web advertising with a CPM model.
So, what is an effective way to advertise on the web? Let us first discuss what we mean by "effective". Effective can mean different things: donations or sales, numbers of contacts, increase in traffic, etc. It is important to define beforehand—prior to any dollars being spent—what "effective" means to you. We need to discover several things in that process:
- What is your advertising budget?
- How much return are you expecting?
- What time-frame are you expecting this return?
- How much would you be willing to pay for each instance of return?
Working from this approach you will quickly see how the CPM model only allows you to answer the first question and leave you little control over the others. In order to really get a grip on your ROI expectations, you really need to have a good plan in place from beginning to end of a user's experience throughout the process of the desired outcome. You'll want to look at each increment in that process and find out some numbers such as: sales per visit, dollars per visit, drop-out percentage, etc.
Once you have this all in hand, you're ready to look at alternative models of advertising. Some examples would be:
- Pay-per-click advertising with Google or Yahoo: you pay for each click to a pre-determined landing page
- Co-registration advertising: you pay per name generated to an email list which you would market to
- Free/Premium advertising: you can set this up to pay per name generated and use this list to market to with both email and direct-mail marketing
- Affiliate marketing
- Google Adsense
If you would like to learn more or need some advice as you develop your marketing campaigns, just drop us a note!
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