Monday, June 13, 2016
Digital marketing has evolved rapidly over the last decade, particularly as social media sites have grown increasingly more prominent. But the methods of promoting your business and brand online is not just becoming more diverse, it's becoming more articulate -- Companies have now become more sophisticated as they can track user behaviors and analyze an ROI in order to understand how effective the marketing is and how it can be improved. The idea of gauging your site’s performance based on views and search volume has given way to more insightful ways of measurement. It’s no longer just about how many people see your site—it’s about how that digital marketing’s success is measured and refined. Influencer campaigns allow for several channels to reach the goals of a company. Being that, there is more than one way to have a return on Influencer Marketing. The perspectives presented by these metrics are engagement-based, and allow for businesses to get a closer look at the real cost-per-acquisition figures. Now let’s move on to discuss the way that digital marketing is changing and adapting, as well as a few schools of thought on how we look at it's effectiveness.
CPM v. CPC Models
For someone that is not intensely involved in marketing, the battle between CPM and CPC models is probably something that the average person has never heard of. Essentially, these models are different ways of pricing social engagement and social media. “CPM” stands for Cost Per Mille. “Mille” is the Latin term for 1,000. So, CPM models price media based on every 1,000 views. CPM is inventory-based, and is often preferred by publishers for that reason. Pricing things by inventory is less risky than pricing through performance. Publishers get paid-per-view, as opposed to being paid for the actual results of that view. It’s low-risk for the publishers and easier for them to price out, which is, primarily, the driving force for its popularity.
The CPC model, by contrast, stands for Cost Per Click. This model, unlike the CPM, is performance-based, not inventory-based. The publisher only gets paid when an ad is clicked, not simply when an ad is viewed. No matter how many views an ad gets, it’s the clicks that matter for the publisher, which tends to work out much better for marketers and businesses since visibility is secondary to actual conversions, and clicks are a step closer to the end of the funnel. Smaller publishers are sometimes more amenable to a CPC model, often because that is one of their only options, but it tends to lose favor with publishers because it increases their assumption of risk. After all, if the ad placement is ineffective, they don't get paid.
Which should you use?
CPM and CPC models are both useful for businesses, but the type of company you are does have an effect on which you should choose. If your company has a highly-engaged audience and large volumes of traffic, CPM models can be just as effective as a CPC model. If your primary goal is simply brand exposure as opposed to immediate volume of conversions, CPM is perfectly fine. But if your immediate goal is to drive sales, the CPC model becomes more and more advantageous. It comes down to the goals your campaign is engineered to serve, the implementation of your analytics, and, of course, the effectiveness of your ad design.
The Trend in the Models
The battle between CPM and CPC models comes down to the preference of the publisher versus the preference of the marketer. Publishers tend to prefer CPM because it is inventory-based, and is low-risk in comparison to CPC, which is performance based. Marketers often prefer CPC, although there are smaller publishers who use CPM. With the inherent conflict comes the need for understanding the audiences you can reach through a given publisher and how those audiences behave, as well as understanding how to establish conversion tracking for your marketing activities so you can assure that your investments are protected, regardless of which model your negotiations eventually steer you towards.
As time progresses, the CPM and CPC models will continue to compete for the top spot. Currently, the trend is showing an increase in CPM. 33% of pricing is done using the CPM model, which is an increase from 32% in 2012. CPC models are down 2% since 2012, moving from 66% to 64%. Although this switch is not major, it is something to note if you are watching the way the trends are going. Quarterly, since 2012, this has held steady. Whether or not it progresses depends on the preferences of marketers and publishers and which will win out.
What is clear is that digital marketing as a whole is still on a major upswing. According to the Internet Advertising Revenue Report, the revenue from online advertising has increased steadily for the past several years, with a slight decline during the recession in 2008 and 2009, and then a continued increase afterward. In addition, Currently, search-related revenues are the largest of all of the formats at 41%. Mobile and display-related advertising come in second and third, respectively.