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Flat Rate vs CPM Advertising

Being that Devtome is trying to get monetized and pass off some of the earnings to its authors, I think it is a good time to discuss the difference between flat rate and CPM advertising. There is a bit to understand about it, and it is not all as clear and cut as it may seem. When we deal with advertising, it is important to maximize earning (when being the publisher) and return (when being the advertiser). As such, I will be taking this article from the perspective of both the advertiser and the publisher to help better understand the benefits to each.

What is the Difference?

One of the most confusing parts about the advertising types is what CPM means. This means “cost per mille,” which pretty much just means “cost per thousand impressions.” An impression is a single view of an ad, which can be set as being raw or unique. Raw means that if the same person views the ad a hundred times, they got a hundred impressions. Unique means that only one will count for a certain period of time, which is usually set at a day. So even if the same person views the ad a thousand times, it would only count as a single impression.

Then we have the flat rate, which pays a certain amount of money for a certain period of time, regardless as to how many visitors your site gets during that time, how many page views there are, etc. Unlike with the CPM, the number of ads shown to the visitor is not relevant here.

Maximizing Revenue: Publishers

Here is where things start to get a little tough. What you need to know here is how many visitors you get, how many page views they support and the number of ads that you have on your page. Being that you will be dealing with different advertisers that are looking for different things, you need to use your own website's stats to determine which is the most profitable path for your website to take. A way to look at it is like this (this is just an example, using random values for ease of reading):

  • You have 100 visits per month, 1000 views. You have an advertiser that is offering up $1 per 1000 views, so you are earning $1 per month
  • You now have a flat rate advertiser that is offering you $1.50 per month

In the above case, you will need to evaluate your traffic a bit. If you are expecting your traffic for the next month to be over 1500 views, you would be better off sticking with the CPM. If you are seeing that traffic is pretty steady, though, the flat rate is better. What you are doing here is extrapolating data to determine what you should (theoretically) earn with each method. It is very important to realize, though, that you will not always make the right choice. Right now that flat rate could be double what you are earning. But what if one of your articles goes viral and really boosts up the recognition of your website? Now that flat rate has lost you money (short term), but of course you never know when and if this is going to occur. Regardless of your choice, there is some risk involved here.

Maximizing Return: Advertisers

Contrary to popular belief, what is best for the publisher can also be the same thing that is best for the advertiser. It all depends on how well the campaign is going. More views is usually seen as being the best deal, but that is not always the case. If you get more views on a site that is not about your niche, they are worth less than a few views on one that is directly related to your own product or service. The entire point of advertising is to drag visitors to your site (willingly), and that is more of a niche game than a numbers one. People offer to sell millions of visitors for a couple dollars, but those visitors have no actual value. You are much better off paying a few cents per targeted visitor that joined on their own than you are paying a cent per thousand visitors that have no intention of even looking at your site. A lot of times this is due to pop ups and other harassing methods to generate traffic, and if anything it might destroy your site's reputation because when people are annoyed at the spam that is popping up, it ends up being associated with your site.

Determining Value

What I always try to do is help my advertisers out. I work with them to figure out what they are most interested in. For example, are they looking to get a few extra buyers for their product or service, or are they working more towards a branding campaign? In the first case, I would roll with a flat rate (or possibly cost per click) basis. For the latter, it would be a CPM one since they are just looking to get as many views as they can. Each view that is gained on a branding campaign helps persuade its viewer to use the service, so CPM works perfect for that. The advertiser can enter and drop the campaign at any point, leaving them with full control over how they want it to work and allowing them to evaluate its effectiveness.

Conclusion

In conclusion, advertisers and publishers can both benefit from relationships, so long as both parties are open as to what their goals are and they work together to try and make things work. The goal of the advertiser is by far the biggest part of determining the correct path to take, but it also requires the publisher to be open to helping out. Furthermore, the site and its monthly visitor stats will make a massive impact on which advertising methods are best for getting user engagement, so giving input without seeing the stats is not really possible; every site is different and should be treated as such. It is also worth mentioning that you can mix and match advertisement methods as well. As an example of a place that does this, AdSense. While AdSense is generally viewed as being a CPC advertising network, they do have CPM campaigns from time to time as well (which can be seen if you get a lot of traffic on a page and do not get any clicks, as you will still usually make at least a little bit of money). Of course, the CPC campaigns through them pay off significantly more, but that is also just if people are actually clicking on their advertisements. In any case, you can run both of them if you need to fill more slots or want to do some experimenting to see which method is going to pay off the best.

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