In this executive read, we’ll quickly understand why planners and marketers should look beyond the CPM price to truly understand the cost effectiveness of different ad networks/ publishers/ platforms.

A common mistake in the digital marketing industry is assuming that the number of impressions served equals the number of times an ad has been viewed. This misconception can greatly affect pricing and cost-effectiveness, as we will explore below, especially when considering the concept of Viewability.

---

WHAT IS CPM?

CPM stands for cost per thousand impressions and is typically used in measuring how many thousands of people have been served your ad (impressions). The abbreviation has French Latin origins, where ‘mille’ means thousand. In short CPM is a media term used to denote the price of 1,000 ad impressions.

WHAT IS AN AD IMPRESSION?

Each time an ad is shown to a user, it is counted as an impression.

ARE ALL IMPRESSIONS THE SAME?

No, not all impressions are created equal. There is a big difference between a ‘served’ impression and a ‘viewed’ impression. This is where Viewability becomes a crucial metric to measure effectiveness of a platform/ ad network.

WHAT IS VIEWABILITY?

Viewability refers to whether an ad was actually seen by a real person. An ad impression is considered “viewable” if at least 50% of the ad’s area was visible on screen for at least one continuous second (for display ads) or two seconds (for video ads). This means that just because an ad was served doesn’t guarantee that a user had the chance to view it.

WHY ALL SERVED IMPRESSIONS MAY NOT BE VIEWABLE IMPRESSIONS?

There are several reasons why an ad may be ‘served’ but not actually ‘viewed’:

• The ad is served, but appears so far down the page, that the user leaves the site after just a few scrolls, without seeng it.
• The add did not fully render due to various reasons e.g. loading issues, bandwidth issues.

SO, HOW DOES VIEWABILITY IMPACT COST-EFFECTIVENESS? 

Now, let’s understand how Viewability affects the effective price of an ad. For instance, consider a CPM of $10. This means you’re paying $10 to serve 1,000 impressions, which results in an effective cost per impression of 1 cent. However, if the Viewability rate is only 20%, only 200 out of those 1,000 impressions are actually viewed. This drives up the effective cost per viewed impression to 5 cents—making it five times more expensive than originally calculated.

CPM	IMPRESSIONS	COST PER IMPRESSION	VIEWABILITY RATE	EFFECTIVE COST PER VIEWABLE IMPRESSION
$10.00	1,000	$0.01	20%	$0.05
$10.00	1,000	$0.01	100%	$0.01 (5x more effective)

As illustrated, Viewability can significantly influence the actual cost of your ad campaign. A low Viewability rate can make a seemingly inexpensive CPM much more costly in practice. Hence it’s important that planners and marketers look beyond a CPM price and also evaluate Viewability rates committed by different ad networks/ publishers/ platforms, including the large ones.

By understanding both CPM and Viewability, you can make more informed decisions to ensure that your ad budget is spent efficiently, targeting audiences who are more likely to actually view and engage with your ads.