Online advertising transactions are all CPM based. You might think my wild assertion is out of line. You might think you’re buying ads on a CPC or a CPA basis. But when a publisher is looking to sell ad inventory, they’re thinking about the CPM. “How many dollars can I get for every thousand ad views?” And when that CPA deal or that CPC deal comes in the publisher’s doing the math to convert that number into a CPM.
For a CPA deal they’re estimating how many acquisitions they can send to the buyer for every thousand ad views. For CPC, how many clicks per thousand ad views. They’re boiling it down to a CPM because that’s how they can compare the deals. It works like this all the way up and down the funnel.
The CPM has been around for a long time. With the advent of the RTB auction model, the CPM is very dynamic. Each impression up for auction is individually valued based on countless bits of information about the user, the page, the size, the date, the historical performance and a variety of other variables. Even though a separate auction is run for each impression, the bid prices are still in the form of a CPM. It’s in our blood. It is the end result of normalizing the value of an ad impression so that it can be compared to its peers.
I want to point out a couple of problems with the CPM. First and foremost, it’s a single number. This aspect causes a couple of secondary problems that put the buyers at risk. One of the big ones is that there’s no guarantee that the ad will actually show on the page. Steps have been taken to address this by several companies. The result of this problem is a topic near and dear to my heart: discrepancy. Read more
One of the more interesting decisions I’ve made was buying into the blueberry farm. It came about “innocently” enough. My brother and father conspired to pitch an investment opportunity in the form of blueberries.
From Email to Farm
It was 2006 and I was reaping the benefits of the email business I started with a partner back in 2002. We, of course, starved and scrambled to find work for the first two years, but then something hit. One of our clients, a good friend from before the bubble burst, got us pointed at an email platform. We built it, and then managed to find another client who needed one. So we licensed it, and so began our email business.
By 2006 the business was humming along. We had several clients and were expanding into other opportunities. There was a substantial surplus of cash that we opted to take out of the business. This allowed me to pursue other ventures, like farming. Internet technology and farming go hand in hand, right? Read more
When multiple advertisers are bidding for a certain (impression) and more than 1 enter the same bid amount, (each) being the highest, how does the RTB (auction) determine which ad should be displayed.
This question was asked on quora, below is my answer.
Identical bids are not unheard of, but they are rare. Bid prices are presented as a CPM value with up to five decimal places. That means that the actual impression can bid upon with precision down to eight decimal places. So in that rare event, when there are two or more matching top bids, the winner is chosen at random. This is only the tip of the iceberg, though.
Features are being added to RTB systems that allow for preferential treatment of preferred DSPs, agencies, trading desks and even advertisers. Deals that are struck between site owners and buyers are being executed through the RTB infrastructure. Those deals can supersede standard auction mechanics, resulting in a winning ad from a preferred partner in the presence of matching (or higher) bids from other parties.
As time goes on and the RTB system is exploited for more and more features, having equal footing in an auction will be more rare, relatively speaking. There will always be general auctions where no bids are given special consideration. We are, however, entering an era where premium inventory is available to buyers through RTB. With that inventory comes a more carefully crafted environment to buy and sell.
Search engine optimization should be used in conjunction with online advertising to drive more users to your site. It can, in some cases, allow a small business to reduce the month-to-month costs of advertising by bringing “organic” (unpaid) traffic to their web site.
Search engine optimization (SEO) consists, at the simplest level, of three things: knowing your target keywords, optimizing your content around those keywords and building inbound links from relevant external pages. That doesn’t sound so simple, does it. I’ll break down these three points and expose my experience optimizing my wife’s site for her acupuncture practice in Chicago. Read more
Why historically (and currently) only one single bid was allowed for each DSP per impression? Why hide demand from the exchange and create opportunities for the DSPs to arbitrage? – I know this is changing now with the possibility of multiple bids per DSP (openRTB v2) but why ad exchanges let this happen at the beginning?
This question was asked on quora, below is my answer.
A multiple bid response was discussed at the very first OpenRTB meeting. It was not seen as a favorable feature by the demand side, at first. They preferred submitting one bid. Supply side partners were not in a position to force the issue, nor had the necessary research been done to support the idea.
From the supply side’s perspective, as with many transaction systems, early efforts in RTB were focused on connecting the pipes. RTB represented a new source of demand and the pressure was applied to getting plugged in to as many DSPs as possible. Read more