Online advertising has become one of the lucrative fields for experienced digital marketers. Stats show that there are 4.66 billion internet users globally and more than 2.14 billion online purchasers. If you’re new in this field or have a young online website, you may find it challenging to understand some of the concepts that apply in online promotions. One of the terminologies you’ll come across is the cost per mille (CPM). You need to understand various vital aspects of CPM, and the knowledge will assist you in delivering result-oriented online marketing campaigns.
What is target CPM (tCPM)?
Floor price enables publishers to create a minimum price for their ad spaces. If a bid comes up for an ad unit, it’s evaluated as per the floor price. For optimal fill rates, publishers steer away from creating high floor prices. And this may result in selling their inventory at a throw-away price, thus underutilizing the real potential of their list. Due to this dilemma, Google created Target CPM on their Ad Manager portal.
Target CPM (or tCPM) is a dynamically allocated floor price for an advertisement unit. The price can be higher or lower than the floor price set by the content creators. Google Ad Manager created tCPM to equalize the arriving bids actively and retain the target eCPM of the website owner.
How does target CPM influence the header auctions?
Header auction enables the simultaneous sale of ad inventory to direct and programmatic advertisers. The procedure happens in one unified auction rather than in a splintered manner. The advantage of this procedure is that every purchaser has the same opportunity to bid on the same ad space, which allows for enhanced competition between bidders. And this means improved revenues for publishers.
When running header auctions with a set target CPM for your ad spaces, you should communicate the floor prices to partners. In specific cases, price proposals from partners may be lower than tCPM, and ad servers may avoid them. Thus, the best strategy is to create corresponding floor prices for supply-side platforms taking part in your header auctions. You can achieve this through a header wrapper or SSP dashboards.
How to set up target CPM in Google Ad Manager?
If you’re a Google ad Manager (GAM) publisher, a target CPM feature is available for you on the platform. You can activate the feature when setting up price rules for your ad spaces. Currently, Google is moving from second-price auction to unified first-price arrangement, and two scenarios exist:
- Open auction pricing rules.
- Unified pricing rules (UPR).
Although Google has moved out of open auction pricing rules, the feature is still available for publishers. According to Google, 3 per cent of Ad Exchange traffic will come with the second-price bid for a brief duration. And this is the reason sellers shouldn’t leave the visitors without any floor prices. So, here we explain how to create a target CPM through both pricing principles.
- Open auction pricing rule
If you can create an auction pricing rule, below are the steps to follow:
- Get to inventory and choose Ad Exchange rules
- After choosing the pricing rules, select the inventory type. Here, you’ve options, like Display, Mobile app, In-stream, video or Games. These choices help you to define pricing rules.
- Suppose you want to set up rules for a Display Ad Inventory. Start by clicking on the new display rule to develop new regulations for the inventory. After setting your rules, name your pricing principle and create its order of priority. Get to the targeting area on the same page and choose the inventories applicable to targeting. Y
- Create targeting and in the pricing area, choose ‘Set target CPMs’ and save.
- Unified Pricing Rule (UPR)
You can use unified rules in setting up tCPM. Here are the steps to follow:
- Go to inventory and find pricing rules
- Select New unified pricing rule and mention it for reference
- Create targeting and pricing area, choose ‘set target CPMs’
How to Optimize target CPM in Google Ad Manager?
Google Ad Manager offers multiple chances for publishers to perform A/B testing and maximize their Ad income. Through Google’s ad server, you can take advantage of the Opportunities feature to find out if your target CPM is performing optimally. As a publisher, you can only perform a deeper evaluation of the target if you conduct different experiments and analyze information by altering tCPM figure for the inventories. You can perform experiments on Ad Manager using the following steps:
- Get to the Google Ad Manager home page and click the button Opportunities.
- Tap View Opportunities to choose the Opportunity type.
- Choose ‘Enable Target CPM on Unified pricing rules.
- Click the experiment tab and key in a name for the Experiment. For example, you can enter Test_t_CPM1 and set the start and end dates for this Experiment.
- Once you’re through, choose the percentage impressions to provide the traffic to the test—Tab Start experiment.
The above experimental steps enable Google Ad Manager to run a trial for a specific period and generate a report that publishers can evaluate. You can create the report by getting to the ‘report’ and clicking ‘Experiment’. While analyzing the info, find out the effects of new changes on the performance of the various items that target CPM focus on. Besides the manual reports, Google Ad Manager can offer you helpful tips and suggestions on the best techniques for optimizing your tCPM rates.
You can disable the tCPM feature for various things by changing the settings in Google Ad Manager.
When Google changes bids automatically, it intends to assist publishers in benefiting from multiple impressions via tCPM. For the best results, publishers should be patient and wait for at least 48 hours to enable the ad server to evaluate the performance of demand partners. In summary, the central role of tCPM is to improve your ad fill rate. As a publisher, you can reap multiple benefits and strengthen your impressions if you follow the steps in this article.