Which bidding method should be used for an advertiser focused on achieving direct response marketing objectives? Many in the advertising community would say that it all boils down to cost. With so many different options out there for advertisers and with so many competing costs, how can a company make a cost effective decision? In order to gain an understanding of which bidding option is best suited for your particular objectives, you must first understand the various types of bidding methods:
Cost Per Thousand (CPM) Ads The most traditional and often the most effective cost per thousand impressions (CPM) model is displayed on the top of this list. With CPM, an advertiser is able to control how much money his or her ad will cost on each individual web page. How exactly do they do this? When a prospective customer views your web page, the cost of that individual impression is subtracted from the cost of that sale. That number is the effective cost per thousand impressions, or ecpm.
Viewable Cost Per Thousand (VCP) An alternative to CPM is the standard cost per thousand impressions, or vcr. With vcr, an advertiser only pays for a single impression, regardless of how many people view his or her web page. This is often less expensive than traditional CPM models and offers advertisers greater control over their marketing costs. However, it is important to note that using or requires a constant and ongoing effort on the part of an advertiser to monitor the effectiveness of his or her campaign.
In order to answer the question “which bidding option is best suited for an advertiser focused on direct response marketing goals?” the internet marketer will first have to determine which types of campaigns are most appropriate for his or her particular goals. Next, the internet marketer will want to compare the costs of those various advertising campaigns. Finally, and most importantly, the internet marketer will want to establish a baseline of his or her ideal pay-per-click effective cost-per-thousand impressions. Once this is established, the internet marketer can compare the cost-per-click effective cost-per-thousand impressions of various advertising campaigns.
Pay per click is the standard by which all other forms of online advertising are measured, so that is the campaign which the internet marketer will compare when determining which bidding option is best suited for an advertiser focused on direct response marketing goals. Let’s assume that we have established a baseline of ideal pay-per-click effective cpi; that is, a cost per thousand CPM. Now, let’s assume that our hypothetical internet marketer wishes to test a new advertisement which matches the keyword-density of the aforementioned campaign. What would be our starting point in this example?
The starting point for our comparison study would be the keyword frequency of two videos, one in English and one in Spanish, which is being distributed to a broad range of websites and media channels. Let’s assume that the advertiser deploys the Spanish video ads at approximately one percent of their overall campaign and that the English version of the ad runs every time someone searches for the specific keyword “Spanish.” We’ll then conduct a simple comparison between the two keyword campaigns. The results will show that the ad that receives a higher number of clicks costs less to run than the English version of the video ads.