If initially you had to bid on specific keywords and reach a potential customer in the most expensive way (since it was your only way), now you could reach them at different stages which means that you could reach relevant users for a much lower cost. The revolution of discovery platforms like Facebook then followed by Youtube, changed the way we advertise and opened up doors for so many new advertisers. This leads us to the next point, automatic algorithmic advertising. In other words, moving your targeting to autopilot. How exactly? Once they start seeing who interacts and converts from your ads or even who converts on your website, they will find similar people based on online behavior and user characteristics. Instead of telling the platform which keyword you want to target, tell it what specific objective you want to achieve (getting a lead, a sale, or another form of conversion) and it will find the most relevant users who are likely to complete that action. Instead, we can optimize based on your advertising goals. ![]() People are not searching for products or services on Facebook, so advertising based on search terms or keywords is not even an option. This started to change when advertising platforms like Facebook rapidly emerged and changed the way that we advertise today. ![]() That’s why specific keywords like Mortgage or Attorney can average at $50 PER CLICK! And can get as high up as hundreds of dollars or more. When advertising becomes focused on specific search terms or keywords, competition becomes more aggressive, and depending on the industry the cost to advertise will skyrocket. For some businesses it worked great, while others were pushed out of the game. The cost per click would be based on the CPM cost ( cost for 1000 impressions). Then, advertisers could simply bid based on keywords and tell the advertising platform how much they want per click (CPC). When advertising was mostly focused through direct search and keyword-based bidding, advertising platforms like Google could easily create bidding around a specific keyword and location and advertisers would know exactly who their ads are delivered to and at what specific search terms. The cost per 1000 impressions on average, will be dictated based on the amount advertisers tell the advertising platform how much they are willing to pay for that space when the highest bidder wins. If Advertiser A and Advertiser B want to reach the same user, they will both dictate how much they are willing to pay, and based on the highest bid and ad quality or relevance, the winner will win that ad space. It sounds a little complex but it’s quite simple. Imagine a virtual game, where millions of advertisers compete for the same users (ad space) and a system (algorithm) takes their bids based on many factors and decides who wins based on the advertiser’s bid and ad quality or relevance. An online action, that is opened to all available advertisers on the specific advertising platform. Advertising on most major advertising platforms is done based on a simple bidding system. Now that we understand what CPM is, let’s talk about how it’s used and regulated. (Example: If you spent $50 and got 10,000 impressions, your CPM was $5.) CPM measures the total amount spent on an ad campaign, divided by impressions, multiplied by 1,000. If you’re paying more money for the same ad space, then how can your results stay the same or get better? It will increase your cost to reach users, the cost to get the users to your website, and the cost to get a conversion and obviously will negatively impact your return on investment.ĬPM is a common metric used in the online advertising industry to measure and price the effectiveness & delivery of ads.įacebook defines it quite clearly. ![]() There is one common misconception in paid advertising, when the cost per impression (cost to deliver an ad impression) increases, your performance & profitability will decrease.
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