Some thoughts on media pricing models from the POV of the #mediabuyers.
Many moons ago, I started digital media life on the seller's side of the table, facilitating the purchase of web publisher ad space for a large base of entertainment industry #advertisers.
At the time, the dominant pricing models were #CPC, #CPM and fixed or flat rate direct buys. As one colleague put it, you could buy clicks, impressions or static placement (aka "all you can eat" visibility of a banner, interstitial or other form of takeover style ad format).
Our firm managed the sales of all three types of digital ad/traffic pricing models for a mix of specialty publishers. The omni-present question was whether a specific pricing format for paid media was better than the other. CPM and flat rate buys only guaranteed exposure (was the thought) while the CPC model at least ensured an advertiser was guaranteed a quantity of clicks to their site.
While there are a ton of factors that impact the success of any media buy, no matter how it's priced, several of my advertisers at the time did not want the risk of CPM ads yielding too little clicked traffic and thus potentially not enough conversions (ecommerce) to justify the ad expense.
The wisest perspective came from one trusted advertiser who we loved working with. One day, after usually selling them CPC deals, we had a hot new publisher that was rigidly insistent that all ads sold on their behalf be transacted on a flat rate or a CPM basis.
When I asked our flagship advertiser about their comfort zone with buying outside of the CPC model, their marketing director put it rather simply:
"Scott, we don't actually care what pricing model is used to sell us traffic. Whether its CPC, CPM or flat rate, we are still going to use a conversion driven mathematical model to determine the effective #CPA or cost per action outcome and thus determine with simple math whether we made or lost money on a given ad buy." This was ROAS before it had a name.
In effect, it was all about spending X and did we make Y. Yes or no. The ultimate performance marketing gold standard, which still matters to this day, maybe even more so.
That early advertising client was never interested in eyeballs or engagement metrics other than fiscal outcome, even in a #purposedrivenmarketing environment.
Campaign data can tell many styles of stories, but it doesn't lie.
Nearly 25 years later, even with the plethora of social media engagement/ #ROE-oriented metrics and other non-conversion specific metrics, virtually all brands care most deeply about the #ROAS outcome.
I do too.
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4moYes, this is a great measure to be aware of and it needs to be reviewed holistically. It depends on your advertising objective. Lower funnel activity on Amazon will appear to drive the best unit profit return in isolation but you could argue you might have sold the product anyway. There's an efficacy ceiling for investment. Upper/mid funnel activity drives less profit per unit but the sales are likely to be more incremental. It comes back to needing to bring shoppers through the funnel which drives the more profitable ad spend at the bottom 😅