Digital media can get very complicated very quickly, but the buying and selling of online ads can be understood as simple economics of scale: the demand of inventory dictates the cost of the inventory. Simply put, as more brands want to buy the ad space, the cost of that ad space increases.
When you are buying media on a cost-per-thousand (CPM) model, that means for every 1,000 impressions served, you are charged a price. How is this price determined? There are a number of variables involved, such as:
What channel you run ads on: Some channels, such as display, might have a CPM of $6, whereas a Connected TV (CTV) channel might have CPMs closer to $25 or more.
What publishers you serve ads on: Serving an ad on the top of the Forbes homepage, for instance, costs (a lot) more than serving an ad at the bottom of a page on a celebrity gossip website.
What time of year your campaign is running: Time of year is the topic we’ll be doing a deep dive into today. Peak holiday season coincides with peak ad-buying season. This makes sense—more companies want their brand top-of-mind when people are looking to buy gifts or choose a restaurant for a holiday get-together. And of course, greater demand means higher CPM costs.
The demand for ad inventory skyrockets during the last couple months of the year, especially during the four-day period between Black Friday and Cyber Monday; companies, on average, spend 25% of their yearly marketing budget within the four days from Black Friday to Cyber Monday.
While this expenditure may seem excessive, the fact of the matter is that study after study has shown that over 80% of shoppers purchases are influenced by online ads. So while the percentage of spend might seem high for such a short period of time. The rationale is based on the empirical observation that getting users to see your ads leads to an increase in purchases for your brand.
You’re likely wondering, “I get it, brands pump money into selling for the holidays. If I’m not doing that, how am I impacted?” The bottom line is this: regardless of whether your brand is or isn’t participating in the holiday media push, your marketing efforts will still be impacted by the increase in media costs.
Let’s say your current budget is $10,000 per month, and you traditionally see a $5 CPM. That means you would see around 2,000,000 impressions.
Now, let’s say during the holidays you have the same $10,000 budget, but your CPM increases to $10. That means you would only serve around 1,000,000 impressions.
(In actuality, CPM’s usually rise by about 45% during the Black Friday/Cyber Monday push, so if your CPM is currently $5, it will likely rise to about $7.25 during those dates.)
With this rise in cost, you can expect the number of impressions to decrease for a short period of time. Zenreach, however, believes in performance above all else, and is already anticipating this increase. We have strategized in anticipation of this CPM spike and are making optimization adjustments to your campaigns to capitalize on the influx of online usering during the holidays, while at the same time driving the performance you have come to expect from us.
Now that you can rest assured that your media is in good hands during the holiday season, the only question remaining is: how do you plan to capitalize off these holiday shoppers—and how can Zenreach help?