Founder and CEO of Channel Factory, world leader in brand suitability, content alignment and ad performance on YouTube.
Most brands advertising in the digital video space in 2020 are probably familiar with the terms “brand safety” and “brand suitability,” which refer to the strategy of preventing ads from running with content that is either questionable or inappropriate, and ensure that ads only run with content that makes sense for that brand. Brand safety is a baseline standard whereby advertisers seek to avoid content that could harm their brands, such as content featuring racist themes. Brand suitability is specific to the advertiser’s values and messaging and might refer to a sunscreen brand preventing its ads from running with news content relating to hurricanes or wildfires.
Running a brand-safe or suitable campaign has previously been thought of as avoidance (i.e., a “days since last accident” approach that measures success as the absence of any bad press or client callouts). Instead, advertisers could benefit from a positive metric — rather than a negative one — that helps you ensure that the content that your ads surround is appropriate and contextually relevant.
This is why many marketers are gradually turning their attention to the quality of impressions served; traditional cost per mile (CPM) and cost per view (CPV) metrics only give advertisers insights into the cost of serving impressions and views. They don’t help advertisers understand the type of content that their ads ran with. Many advertisers are starting to demand greater control over where their ads run, and that quality-driven approach has a new metric: quality CPM (qCPM). This metric has gained some traction in recent years.
Travel companies, for example, might want to appear alongside content relating to food, drink and travel vlogs (context) typically consumed by jet-setting millennials (audience). They also might embrace family-friendly values that make content containing profanity a no-go (suitability) and want to ensure the videos they appear with drive home a positive message (sentiment). In this example, qCPM is defined by impressions from content that meets those targeting criteria.
How qCPM Works
Quality CPM can be used to measure campaign performance according to whether ads ran with brand-suitable, contextually aligned content (i.e., quality content). So if you calculate CPM by dividing cost by impressions and multiplying that by 1,000, and viewable CPM (vCPM) by dividing cost by viewable impressions and multiplying by 1,000, then you can calculate qCPM by dividing cost by quality impressions and multiplying by 1,000.
Take, for example, a campaign with an assumed $8 CPM. Let’s say 720,000 out of a million impressions from that campaign were from content that worked for that brand. The assumption is then that the remaining 280,000 impressions were considered “wasted” because they were from content that did not reach the intended audience. An example would be if an auto manufacturer ran ads in video content for kids. Using the above formula, the qCPM of that campaign is $11.11. That is obviously higher than $8, so the brand would be effectively paying more for its campaign when you consider the wasted impressions.
Brands can drive outcomes where CPM and qCPM more closely align by deciding what content they want their ads to run in, such as music videos, home improvement videos or sports videos, and then creating inclusion lists that contain only that content. Creating these lists enables brands to advertise in environments that make sense for them.
These lists need to be refreshed throughout a campaign. If they’re not, advertisers may keep buying from the same static inventory. Inevitably, simple supply and demand forces mean that bidding on the same content will likely drive up the price. Not only that, but brands may also miss out on more relevant, engaging and maybe even viral content.
When brands engage in constant inclusion list optimization, the result is an effective qCPM that’s lower than the CPM. In plain English, by constantly bidding on fresh, brand-suitable content, and not relying on stale inventory, brands are able to get their impressions at a lower cost. In our own tests, we’ve seen performance optimizations of up to 30% below a campaign’s CPM. Based on our above example with an $8 CPM, your qCPM could be lowered to $5.60. So if you’re keeping track, you are no longer wasting impressions; you’re actually improving your performance. And when dealing in hundreds of thousands or millions of dollars, this becomes a sizable cost savings and performance driver.
We like to compare this perpetual optimization to professional auto racing, where frequent pit stops keep the cars in tip-top condition. When it comes to digital video advertising, the principle is the same: Keep switching out old content for new and low-performing content for high-performing to ensure that your ads run in the ideal environments for your campaign goals.
With qCPM, you can leverage a metric that guides your media dollars in the direction of content that not only drives outcomes for your brand, but also reinforces investment in your brand values. Guaranteeing a qCPM that’s lower than your initial market CPM requires planning and ongoing optimization. Taking the time to curate and continually optimize a customized inclusion list, rather than simply setting and forgetting your brand-suitability strategy, pays off by delivering more efficient and less expensive campaigns.
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Author: Tony Chen, Forbes Councils Member