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About the Pricing and Buying of Digital Ads All About the Pricing and Buying of Digital Ads Digital Advertising Pricing Structures

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About the Pricing and Buying of Digital Ads All About the Pricing and Buying of Digital Ads Digital Advertising Pricing Structures ALL ABOUT THE PRICING AND BUYING OF DIGITAL ADS ALL ABOUT THE PRICING AND BUYING OF DIGITAL ADS DIGITAL ADVERTISING PRICING STRUCTURES Digital advertisements have some common pricing structures that run across the various types of ads. While ads have different objectives, the prices are often based on the same models. In this section, we are going to take a look at some of these models and what they mean. Bidding According to Google, its ad auction Types of Bidding Many ad units are sold in an auction, “uses both quality and bid to • Manual: which to most people brings up the determine an ad’s position”. Bidding Manual bidding is exactly like it image of a high-stakes bidding war models, like Google’s, allow you to sounds, done manually by you or with a fast-talking auctioneer or the have a competitive bid, even if you the member of your team who feeling you get when you win a offer a lower bid amount, because manages digital advertising. This brand new Apple Watch from eBay. part of its formula is based on content–relevant keywords and person manages the maximum bids manually for campaigns and Most digital advertising ad auctions quality images. individual keywords. don’t operate this way. They use a unique formula to determine your In an auction environment, you can • Automatic: ad’s position—where your ad places pay less than your maximum bid Automatic bidding is less hands- on the page. because you only pay what is on, as it relies on a daily average minimally required to hold your ad maximum budget. Then, the ad position and ad format. The price you platform does the bidding for pay will increase up to your you. The goal of the automatic maximum bid in order to hold your bidding is to bring you the most position and format. Because of this clicks possible in your budget, structure, you can sometimes come within your maximum. in under budget. When this happens, Programmatic ad buying, which what you pay is called your actual we will discuss in more depth cost-per-X—where ‘X’ could be actual later in this guide, is an automatic cost-per-lead or actual cost-per-click, type of bidding done in etc. based on your pricing model. milliseconds by software. ALL ABOUT THE PRICING AND BUYING OF DIGITAL ADS DIGITAL ADVERTISING PRICING STRUCTURES Performance In this example we can see Advertising Models Facebook’s ad platform and its CPC Performance advertising consists of bidding dashboard. It suggests a four main pricing strategies, which competitive price for your bid. share the characteristic that the advertiser only pays when there are Cost Per Thousand (CPM) measureable results. These pricing Cost per mille (CPM), also known models help marketers new to digital more commonly as cost per thousand, is a pricing model that advertising minimize their risk Facebook Ad Platform CPC Bidding Dashboard because they only pay for results. charges advertisers for every You can’t argue with that! thousand impressions, or every time a thousand people see the Cost Per Click (CPC) advertisement. The downside to Cost per click (CPC) charges CPM is that an advertiser is charged advertisers each time someone for a “view” and not for a “click”, so clicks on their advertisement. It is an it’s less action-based than some of effective pricing model for ad units the other performance advertising that marketers are using to drive pricing models. traffic toward a specific site, but is generally less effective for brands In this example you can see the Facebook Ad Platform CPM Bidding Dashboard looking to run digital advertising as a dashboard for CPM bidding on the brand-building, name recognition Facebook Ad Platform. You can see campaign. CPC is the dominant that it describes the type of bidding method of advertising pricing on the and suggests a price that will make market today. it competitive. 3 ALL ABOUT THE PRICING AND BUYING OF DIGITAL ADS DIGITAL ADVERTISING PRICING STRUCTURES Dynamic Cost Cost Per Lead (CPL) Cost Per Acquisition (CPA) Per Thousand (dCPM) Cost per lead (CPL) is more Cost per acquisition, also known as Dynamic cost per thousand or action-oriented than some of the cost per order (CPO), is a model dCPM is a pricing structure that other pricing models. With CPL, that charges advertisers every time works basically the same as a advertisers only pay for leads or an acquisition or order is placed. traditional CPM campaign, but the contacts that are qualified. CPL is a This is often determined by credit Optimized for Objective (oCPM) key difference is that each bid is not good model for marketers looking card transactions. A CPA focuses This pricing structure, used on Facebook, limited to the exact bid amount. to obtain the contact information on driving a customer to buy optimizes your pricing model based on dCPM uses real-time bidding to of interested customers to then immediately. objective. The options to optimize for are: optimize the overall spend. For nurture them through other • Clicks to website example, if an advertiser sets their channels toward action. In contrast to CPL campaigns, CPA dCPM bid at $5, their DSP—an ad campaigns are typically lower • Website conversions technology that enables marketers Traditionally, CPL campaigns are volume, but require a consumer to • Page post engagement to purchase all types of ads in an higher volume campaigns that ask submit more information, often • Page likes automated fashion—can use Real- consumers for basic information personal details like a credit card Time Bidding (RTB) to pick up some on a landing page. on a website, landing page, or • Mobile app installs ads for $0.50 and others for $6.50. sometimes within the ad itself. • Mobile app engagement The dCPM pricing model relies on • Desktop app installs the DSP’s ability to analyze the value of each ad and pay exactly what it’s • Desktop app engagement worth. The overall price of the • Offer claims campaign is kept at or near the bid • Event responses amount, but delivers more value than a traditional CPM campaign. • Video views • Local awareness 4 ALL ABOUT THE PRICING AND BUYING OF DIGITAL ADS TWO TYPES OF BUYING Buying is the actual act of going into a platform and placing your bids. How you purchase your ads can affect the price you pay for them and the amount of work that you, personally, have to do. It’s important to understand the different ways that you, as an advertiser, can purchase ads and then the advantages and disadvantages of each type of buying. 1. Manual Buying One advantage of manual buying via 2. Programmatic Buying than sitting around staring at a Manual buying relies on digital the RFP and IO process is that you Programmatic advertising, in its computer and bidding on ads advertisers to source, bid, create, are essentially reserving your ad units. simplest definition, means automatic. (in our opinion.) manage, and optimize their The platform that you purchase the It is the automatic buying, placement, advertising. This process takes time ads on sets inventory aside so that and optimization of media inventory, Even though programmatic buying and often involves logging into you don’t have to compete in an done by software, replacing the is a non-manual process, make sure different advertising platforms to open-auction. This is compared to traditional human-based methods. you are keeping a close eye on your bid on and optimize ads. programmatic buying, where there campaigns and making are no guarantees of inventory and With programmatic buying, the adjustments as needed. A good For larger purchases of you bid on what’s available from manual processes are substituted by rule of thumb, and one we practice impressions, advertisers may have remnant ads—the ads that are not machines and software. You define at Marketo, is to let your campaigns to contact the advertising platform, pre-reserved and are considered your goals, and your programmatic run for two weeks before making request a proposal (RFP), then left-over ad inventory. buying tries to optimize your any major changes. request an Insertion Order (IO) to campaigns for those goals. get started. Once you have started, Another advantage of this method is Real-Time Bidding you must regularly check in on the amount of control you can have Some marketers may raise red flags, Real-Time Bidding (RTB) allows your ads to make sure that the bids over your ads. This becomes saying that programmatic buying is Demand Side Platforms (DSPs) to are competitive. especially important if you have a technology replacing what they do participate in real-time auctions for small team or budget. With manual on a day-to-day basis, but remnant inventory. RTB is a big part buying you can move and adjust programmatic technology usually of programmatic buying.It occurs budgets frequently between means those same marketers are when a DSP sees a remnant ad hit campaigns and ad units as needed. relieved of the tedious aspects of auction and it automatically their jobs and can spend more time analyzes the surrounding data planning sophisticated, customized points to decide where to bid on campaigns. Which is much more fun the ad unit and at what price..
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