Online advertising has experienced a substantial shift in the past few years. Looking five years back, publishers were able to earn revenue by simply packing ads on their website. It didn’t even matter whether users actually saw those ads or not.
But, with the increase in digital advertising, businesses are now paying more to bid on viewable impressions. If you’re a publisher, it is crucial for you to understand vCPM or cost per 1000 viewable impressions. Let’s take a closer look at what vCPM is and what role it plays in driving revenue for your sites.
vCPM stands for viewable Cost per Mille, also known as viewable cost per thousand viewable impressions. It is a measurement standard that determines how many individuals actually see advertisements on a web page instead of how many users visit the site.
It presents advertisers with a clear picture of the value they’re getting from their advertising efforts.
CPM estimates the cost per thousand impressions, regardless of viewability. Whereas vCPM solely considers viewable impressions. That is how advertisers can leverage vCPM to make more informed decisions and distribute their budgets more effectively, increasing their ROI.
However, remember that an advertisement must meet certain conditions to be considered visible. As per the standards set by the advertising industry, an ad is only considered viewable if at least 50% of its pixels remain visible on the user’s screen for at least one second.
Calculating vCPM is easy using a formula set by the IAB (Interactive Advertising Bureau) standards. Knowing the needed variable allows you to understand your viewable Cost per Mille.
The formula to evaluate vCPM:
Budget ÷ [(Total Ad Impressions * % of Ad Viewability) ÷ 1000] = vCPM
To build an ad campaign using a vCPM plan, we must have the following variables:
Ad viewability: 68% (average for ads viewed above the fold)
Ad campaign budget: $100,000 (part of the company’s advertising budget)
CPM: $1.25 per click
Total impressions: 25,000,000
Viewable impressions: 17,000,000 (68% of total impressions)
Maximum vCPM bid: $5.00 (target bid)
Remember, we discussed formerly that for an ad to count as viewable, at least 50% of it must be visible for over one second. If you take the above variable and employ it in our formula, it should work out as below.
$100,000 ÷ [(25,000,000 * 0.68) ÷ 1000) = $5.88
The result indicates that each viewable CPM is $5.88 since 68% of the ad falls within the visual field for more than 1 second, as specified in the IAB standards.
In the past, publishers used to consider every single visit to their website as a view, which, in fact, wasn’t true. The method was inefficient since it often resulted in inflated view counts that did not accurately measure engagement. The dynamic has been changed after guidelines by the Media Rating Council and the Interactive Advertising Bureau. An ad is considered viewable if it meets certain criteria, like being at least half visible on the screen for a second (or two seconds for videos).
The viewable rate then tells you what proportion of the times your ad appeared that it had a chance of being noticed. Tools like Active View help measure this metric. For instance, if your ad was served 1000 times but only 700 of those times it was viewable, your viewable rate would be 70%.
vCPM (viewable cost per mille) is a metric that advertisers use to measure the cost of reaching actual viewers rather than just impressions. By focusing on viewable impressions, advertisers gain valuable insights and can optimise their campaigns for a better return on investment (ROI). Understanding vCPM is crucial for publishers to maximise their revenue by ensuring ads are strategically placed for maximum viewability. As an advertiser, if you also wish to improve your ad campaigns and ensure you achieve optimal results, try leveraging vCPM for your advertising results and experience the change yourself.
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