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Please Check my CPM Math

by LegionNate
4 replies
I was talking to a company about running a banner on their site. They are well-established, and it would be a great fit for me.

They charge $8 cpm, so 1,000 impressions for $8.

They said their average CTR is 0.1-0.25%, but of course that will vary.

If my math is correct (it might not be), 100,000 impressions would cost me $800...

and if we split the difference and I get a CTR of 0.175%, I would count on getting 175 clicks for that $800... which is $4.57 per click... which is about EIGHT times what I pay for Adwords clicks.

Did I do something wrong along the way? I always thought banner ads were supposed to be much cheaper than Adwords clicks, usually. Thanks for any help.
#check #cpm #math
  • Profile picture of the author Lance K
    Your math is correct.

    I recently looked into a media buy that was $50 CPM and the highest average CTR on any of their ads for 2011 was 0.28% (Yes...$17.86/click).

    The site is owned by a large media firm that started in magazine publishing. The ad rep said their click through rates are double the industry standard (per DoubleClick research).

    Most of the ads are from large corporations running branding type ads and have no call to action (the target market has a lot of purchasing power and they are used to making high dollar purchases).
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  • Profile picture of the author Andy Fletcher
    I checked your maths for you and those numbers are right.

    Banner ads are usually cheaper because the inventory is so undersold. It sounds like you're bidding on a site that's good at shifting it's inventory and thus prices go right up.

    Prices in the $8 CPM range are usually only for people running brand exposure campaigns such as Coke Cola or Nike where they have ridiculous sums of money to burn.
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  • Profile picture of the author ours
    No you are not wrong I also completely agree with Andy as in that $8 CPM range Nokia, Cola etc big brand pay. They have very big budget to spend for marketing.
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  • Profile picture of the author LegionNate
    Thanks guys, much appreciated. Sounds like this price is much too high for me. I of course am no Coca-Cola, or anything of the like, but instead need to count on making a good ROI on these physical products that I'm selling. It also seems to me that I would need to pay more like 1/10th this price to make it work... and even that would need to be tested. Thanks again.
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