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Buying Advertising
(July 20, 2001) If you are buying advertising, either on or off the Internet, you will hear the term "CPM". In English, this acronym means "Cost Per Thousand" ("M" represents 1,000 in the Roman Numeral system). An easy way to think of it is to imagine CPM as the cost to reach 1,000 members of a specific audience.

CPMs are usually expressed as "X dollars per thousand" or in figures resembling "$75CPM". A $75CPM means that for each $75 you spend, your ad will be seen by 1,000 people.

Sites that sell advertising will guarantee an advertiser a certain number of "impressions" - the number of times an ad banner is downloaded and presumably seen by visitors - then set a rate based on that guarantee multiplied by the CPM rate. A Web site that has a CPM rate of $25 and guarantees advertisers 600,000 impressions will charge $15,000 ($25 x 600) for those advertisers' ad banner.

Every day, there are new ways to advertise on the Internet. Internet advertising can be carried out in several ways, ranging from simple run-of-the-site campaigns to the addition of filters or targeting devices to keyword advertising. Advertising in opt-in e-mail newsletters with text ads is gaining in popularity because the creative process is usually cheaper than banners and the CPMs are lower (it doesn't mean that it's a better form of advertising, just a cheaper one). Many sites now offer sponsorships or affiliate programs, which are customized to the sponsor's needs.

Advertising rates vary across the Internet. Some sites publish their rates on their site as part of an online media kit, while others provide a contact name for more information.

In any media, internet or otherwise, there is always some level of discrepancy between the traffic estimates and the reality of the purchase. In television and radio, it is impossible to do anything but grossly estimate audience size. In print publications, audience size is usually assumed to be the number of printed copies even though many magazines and newspapers never get read.

The same principles apply on the net. There are many reasons for discrepancies between the number of ads that are consumed and the number you pay for. While email lists typically have a low CPM, this is partly due to the fact that much email is never read. Website advertising is typically a better deal (from the perspective of reach) because the number is always undercounted.

It's interesting to understand that the key to job board profitability is the fact that their CPMs are, by leaps and bounds, the highest of any alternative.

- John Sumser © TwoColorHat. All Rights Reserved.

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