What is vCPM?

Reading time: 5 minutes

In 2015, Google made some significant changes to the programmatic advertising[1] world, including the announcement that publishers would start being paid only for the viewable ads on their web pages. This meant that it wouldn’t make a difference whether a publisher[10] placed 2  ads or 12 ads on a page — only the ads actually seen by the visitors would count.  

As you can imagine, this threw a wrench in most publishers’ plans. At the time, up to 56% of ads displayed on a webpage were never seen, yet they still earned revenue for the publishers. Of course, the silver lining was that with the rise of programmatic advertising and this new viewability[5] rule, advertisers were more willing to bid more on viewable impressions.

Hence the need for the cost per 1,000 viewable impressions (vCPM[2]) metric. 

Now, with viewable ads in play, advertisers would prefer to pay in vCPM rather than CPM[3] — which is why publishers should have a firm understanding of the metric and how it works in regards to user interactions and what counts as a “viewable” impression[6]

Let’s take a closer look at the vCPM metric and its particular role in increasing your bottom line. 

What Exactly Is vCPM?

So far, you know that vCPM stands for “cost per thousand viewable impressions.” But what does that mean?

Put simply, for every one thousand impressions successfully viewed or interacted with earns a specific dollar amount. So, if the vCPM is $2 for every one thousand viewable impressions, and a publisher receives 4,000 successful views for an ad impression in one day, they’ll have earned a total of $8. 

Just to reiterate, this does not include the rendered creatives that appear on the page that a user just scrolls by.

What Makes an Ad Impression Viewable?

The math here is easy. What’s more complicated is understanding what it is exactly that makes an ad impression viewable. By definition, a viewable ad impression is an ad creative[11] that’s rendered onto the page and is actually seen by the users. 

But how do you go about determining which ads are considered seen

The Media Rating Council (MRC) has created a set of rules to determine whether or not an ad can be considered “viewed” for both publishers and advertisers alike. 

The rules are as follows:

  • For display ads[7], a minimum of 50% of the ad or ad pixels must be visible on the user’s screen for longer than one second
  • For large ads, a minimum of 30% of the ad or ad pixels must be visible on the user’s screen for longer than one second
  • For in-stream video ads[12][4], a minimum of 50% of the pixels must be visible on the user’s screen for longer than two seconds

Of course, calculating the exact number of viewable ad impressions poses a challenge. Even if you already know that one of the above types of ads has been active on a user’s screen, there’s no guarantee that the user in question has actually seen it. Therefore, the MRC has also provided standards regarding how to calculate viewability.

Standard CPM Vs Viewable CPM

Now we have CPM and vCPM. It would seem that the two are interchangeable as CPM essentially stands for “cost per thousand impressions.” However, they are two separate metrics with two very different attributions in the programmatic advertising world. 

When we talk about the CPM metric, we’re talking about advertisers paying a specific dollar amount for one thousand served impressions. CPM actually stands for cost per mille, which is where we get cost per thousand from. 

Essentially, CPM is the formula that calculates the total ad spend for 1,000 impressions on a single web page. Typically in CPM campaigns, an impression is counted each time an ad is successfully rendered, displayed, and viewed by the target audience. From there, the advertiser[8] pays the website owner or publisher the agreed-upon dollar amount per each one thousand impressions of their ads.

Here’s the thing about standard CPM: You’ll often hear that it counts ad views and impressions, making it seem like it’s the same thing as vCPM. However, when we talk about ad views and user engagement in regards to CPM, we’re talking about ad impressions — which are the result of ads being successfully served and displayed. Therefore, if a user is scrolling through a web page and gets to the bottom before the ads finish loading, they aren’t counted as successful impressions in CPM.

When it comes to vCPM, as mentioned earlier, the impressions must not only load but also be viewed by the MRC standards.

What’s more, is that both metrics should be used to vary revenue while garnering more brand awareness. 

Percent-in-View and vCPM

Percent-in-view when it comes to vCPM refers to the number of pixels in an ad impression that is successfully seen by the user and is expressed in a percentage. This is something that can directly affect an advertiser’s decision to bid on ad impressions considering the entire point is to generate brand awareness and sales. 

For example, a buyer with 1,000 dollars can either purchase 100,000 impressions offering a 25% in-view guarantee or 30,000 with a 50% in-view guarantee. While the second option is more efficient, it also becomes more expensive per viewable impression when you calculate the vCPM.

Publishers must focus on the volume and percent in-view of their ad inventory[13][9] to get a more competitive bid in direct deals. However, in open ad exchanges, bidders are looking at the average viewability of the ads served per domain (also referred to as domain viewability) to estimate the potential CPM. Therefore, having better viewability pays off in both types of marketplaces.  

Next Steps

Keep in mind that viewability is an incredibly important metric for publishers, especially when the majority of your ad revenue is coming from vCPM. The primary thing you’ll want to focus on is using this metric to help you reach for better viewability by figuring out the ideal placement for the ad serving on your webpage. 
This way you can increase your viewability and your ad revenue without having to keep adding new units or put more energy into increasing your traffic.

Terms
1. programmatic advertising. Programmatic advertising entails using machine learning and technology suites to buy and sell ad inventory with a data-driven process.
2. Viewable Cost Per Thousand Impression [vCPM] ( vCPM ) VCPM is known as the viewable cost per thousand impressions. With VCPM an impression is only counted/viewable when at least 50% or more of an ad was viewable by the user on the screen for at least one to two seconds. Keep in mind that standards and definitions of viewable impressions can differ across platforms.
3. Cost Per Mille/Thousand [CPM] ( CPM ) Cost per mille, or thousand (mille = thousand in Latin). A pricing model in which advertisers pay for every 1000 impressions of their advertisement served. This is the standard basic pricing model for online advertising. See also CPC and CPA.
4. in-stream video ads. In-stream video ads are shown before, during or after a video gets played.
5. viewability. Viewability relates to the amount of time a user saw an ad.

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