In digital advertising, Cost per Thousand Impressions (CPM) is a common and important pricing model that determines how much advertisers pay each time their ad is displayed one thousand times.
But here’s the kicker: there are two types of CPMs, and they’re really different from each other.
First, you’ve got fixed CPM, where the price is set, stable, and predictable—just like that one friend who always wears the same outfit. Then there’s variable (or dynamic) CPM, an option that changes based on things like demand, audience.
Knowing the difference can help advertisers pick the right CPM for their campaigns (and avoid paying too much for impressions).
What does working with a fixed CPM model look like?
Fixed CPM is like locking in on a buffet price—you pay a set amount per thousand impressions, no surprises. It’s stable, predictable, and gives your accountant a sense of calm.
Advertisers can budget without breaking a sweat, knowing exactly what each thousand impressions sets them back. It’s a favorite for brand awareness campaigns, where they’re shouting “Look at us!” from every rooftop, and consistency is the name of the game.
But it’s not all sunshine and rainbows. If ad prices dip, you’re still paying top dollar, and if prices shoot up, publishers aren’t cashing in on the extra dough. It’s safe, but maybe a little too safe, like wearing a life jacket in a kiddie pool.
That’s where variable CPMs come in.
Variable CPM is about going with the flow.
Here, your cost per thousand impressions changes based on things like demand, ad space availability, etc. Variable CPM is exceptionally well-suited for performance-based campaigns because it adapts to real-time market shifts, putting your ad in the right place at the right time.
There are other advantages with Variable CPMs as well:
-With variable CPM, prices adjust based on market conditions, kind of like surge pricing for your ads. If demand’s low, you get a great deal. If it’s high, well, people really want to see your ad!
-Variable CPM also allows you to target those golden times when everyone’s online without having to buy a fixed-rate ad that might perform. By paying only for impressions as demand shifts, your ad shows up when things get interesting (and profitable!).
-Thanks to AI and algorithmic hocus pocus, variable CPM helps your ads show up in front of the people most likely to convert. Why pay a flat rate to shout into the void when you can pay dynamically to reach your dream audience?
-With variable CPM, you’re also adjusting your spend based on real conditions, not hypothetical ones. It’s like being a smart shopper but for ad space! Variable CPM brings flexibility, targeted reach, and savvy budget management to your campaigns.
This flexibility can come at a cost. When demand spikes, so can your price tag. It could be a bit unpredictable, but if you love a good ROI, it’s the CPM for you.
Which CPM Model is Right for You?
Choosing between fixed and variable CPMs depends on your campaign goals. For consistent visibility and budget control, a fixed CPM is ideal. However, if reaching specific audiences at peak moments is crucial, or if you want cost efficiency based on real-time demand, a variable CPM might be better suited. By aligning the CPM model with your campaign’s goals, you can maximize both reach and results.
