When approaching mobile advertising and the different ad networks that there are on the market,
one always wonders which method of reconciling ad delivery we should choose – CPM or CPC? Most ad networks offer both options, and there must be a reason for that, but have any of them ever thought about CPA?
Let´s start by looking at what these terms mean:
CPM = Cost Per Mille
In Latin mille means thousand, so CPM is Cost Per Thousand and usually refers to ad impressions – the number of times an advertisement loads onto a user’s screen.
The ad network´s job is to plan the distribution of ads according to the advertiser’s campaign goals. With CPM this is a simple, risk free task for the ad network – the advertiser provides all the creative work which the ad network simply displays across sites on their publisher network. Note that in this model the advertisers pay for impressions, not for clicks or their resulting actions, so as long as the ad is served the ad network gets paid.
Larger mobile advertising networks such as Yahoo! use this model and big brands seem to like it as it provides both brand awareness across top publisher’s sites, in addition to users clicking on their ads. But there are questions about how advertisers accurately and independently measure the success of their CPM campaigns.
CPC = Cost Per Click
This is where ad networks only charges the advertiser when their ad is clicked. This means that each ad network has to make sure they place ads on sites relevant to the advertiser and their campaign – because no clicks means no money! This usually results in the ad networks charging more for each click than they would for each impression, given fewer people will click on each ad displayed. Since the advertiser is paying more for each click it becomes more important for them to produce a compelling message and a relevant offer behind that message. They need to turn those clicks into actions, since lots of clicks but no actions is not a good result.
This model is what has made Google lots of money and it is normally easy to set-up and is self-managed for advertisers. To measure success, advertisers would count clicks and calculate conversion rates. The result would give you the Cost-Per-Action or Cost-Per-Acquisition.
CPA = Cost Per Acquisition
This is where the Ad Network only gets paid for campaigns that generate a measurable ROI for the advertiser. Naturally the advertiser pays significantly more per acquisition, but only when a click converts into the campaign’s desired action. Sounds like a pretty good deal to me, but its success does depend on the ad networks ability to effectively measure actions.
CPA is currently still in its infancy on mobile, which may sound strange given the extra level of information that mobile provides. Mobile can deliver contextual, targeted messages with location, carrier profile and exact time of interaction, being accurately recorded. Mobile can measure the quality and duration of engagement, and give you depth of information that other media can’t.
The crucial thing, whichever model you chose for your mobile advertising, is to use a good quality, independent mobile analytics tool
. It is the only way to get detailed and accurate information about mobile visitors interacting with your ad campaigns across all ad networks. Not only on one ad interaction but across multiple campaigns over time – it is the only way to see the true value of your mobile advertising investment.