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benchmark rate CPM

by BerryvanUden
2 replies
Hi guys,

I am brand new to this forum so I hope dont ask something stupid / or is available on a other forum.

that being said...

I am trying to determine if the price I am paying on third party website for a banner is worth the money.

obviously I know what the cost are and I know the Ad server impressions, but how do I know if this is a reasonable rate?

thanks!

Berry
#benchmark #cpm #rate
  • Profile picture of the author Rich Aubuchon
    It's reasonable if it's profitable for you...

    If you know your profit per sale, and you know your CTR and CPM for the banners as well as your on-page conversion rate, it's a simple matter to calculate your cost per sale and determine whether you're making or losing money from that placement.

    CPC = CPM / ( Banner CTR * 1000 )

    CPS = ( CPC / CVR )

    To keep the math simple:

    $1 cost per thousand with a 1/2 % CTR means you're spending 20 cents per click.

    To get 100 clicks, you spend 20 dollars.

    If your on-page conversion is 1 percent, you're spending $20 per sale. If your on-page conversion is 2 percent, you're spending $10 per sale.

    Do you make more than $20 per sale? If so, you're profitable on that placement. Otherwise, you're not.

    However, if you tend to generate a lot of repeat sales, it might still be worth it to lose money on the initial sale.
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    • Profile picture of the author BerryvanUden
      Hello Rich, thanks for your extensive reply!
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