3 Min CFO Read: Pay Higher CPMs, Get Better Outcomes

Marketers have been chasing lower CPM (cost per thousand) prices, particularly in programmatic channels, thinking that leads to greater “efficiency” in their digital ad spending. That is wrong and it’s just a race to the bottomless pit of ad fraud and adtech middlemen taking a greater and greater share of every dollar spent by the marketer

Real, mainstream publishers with real reporters and editors create real content for real human audiences. They cannot afford to sell ad impressions at very low prices. But fake sites and app publishers can afford to sell ads at very low CPMs because they have no cost of content and low operating costs — think piracy sites, bot generated sites, etc. Those bot generated sites have no human audiences because they don’t need humans. They just use bot traffic to create billions of impressions to sell through programmatic exchanges to unsuspecting advertisers. 

Marketers have even been led to believe that “fraud is priced in.” It’s OK that there’s some fraud because we’re paying lower prices already — for example, “we’re paying $3 CPMs now, when we were paying $30 CPMs before programmatic.” What marketers don’t realize is that they are buying 10X more impressions at $3; so they end up spending the same $30. But now, by buying $3 CPM ad inventory they are exposed to much higher fraud than before, even if their fraud detection tech can’t detect it.

Source: Forbes

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