App Monetization

Boosting Your App Ad Revenue with CPM Commitments

mastering "CPM commitments" will allow your ad monetization to reach the skies like a rocket

Many app publishers today are utilizing in-app advertising to monetize their apps. This article teaches how to secure fixed CPM commitments from ad-networks and how to use them to boost ad monetization. It includes explanation how to set up your ad-mediation to negate counter measures that are likely to be taken by the ad-networks and how to outsmart them.

CPM commitments needs to be locked with IO

Once you reach a certain volume of about 10M impressions per month in US, ad-networks will start chasing you. If you are using a mediation platform these ad-networks will try to get a bigger share of the impressions by making all sorts of guarentees about CPMs in order to get priority. A typical offer might be: “put us on the top priority in the waterfall and we can promise $7 CPM”. If you get one of these, you should close it with an IO. If you haven’t heard of this term – IO stands for insertion order and it’s a standard way of buying and selling advertising space. A typical ad-network would execute hundreds of IOs every month so they should be very familiar with the process. Locking down the commitment with an IO gives you a few benefits:

  • It means that the ad-network has to keep its word and pay you a fixed price based on impressions
  • The ad-network takes the risk in this case so fluctuations that are caused by campaign changes will impact their profitability and not your revenue
  • This gives a much better basis to go to other networks and get better offers

Expect that a CPM floor will be applied

The ad-network is a smart organizm that leaves and drives data and constently optimizes so what will likely happen is that the ad-network will apply a CPM floor on their side to make sure they are not losing money. Behind the scenes, each network has advanced algorithms that associate an eCPM with each ad display opportunity, when they apply a CPM floor they are telling the algorithm to drop any request that is evaluated below that threshold. The result on your side is that the ad-network will only send you their top campaigns and the fill rate will be dropped. If they give you a CPM of $7 the floor will make sure that you are actually giving them impressions that could have earned you more. There is a cure however. You need to give the best impressions to the other ad-networks.

Configure your ad mediation around CPM deals to boost ad monetization

To understand how to avoid the negative impact of the CPM floor we first have to understand a critical thing about the impact that multiple ad impressions have on eCPM for performance campaigns. Users are less likely to click and install an app that is being advertised to them if they are being exposed to many ads. While each game has their own response curve they all follow the same trend of the 1st impression being the highest paying and the last impression being the lowest paying. The chart below shows the difference in eCPM between performance campaigns and committed CPM campaigns.

image

With this new realization you can now go to your mediaiton platform and find the way to configure it so it would:

  • Give the 1st impressions, 2nd impression and 3rd impression to ad-networks that are paying you based on performance – this way you get to keep the high eCPMs on these impressions.
  • Give impressions 4 and after to the network that gave the CPM commitment – this way you are using the fixed CPM to increase the revenue on these impressions
  • Make sure you have at least 2 additional networks to catch the last impressions that the are left

This method is demonstrated in the chart below. On the left side you will see the most basic setup of putting the network that gave the CPM commitment on top of the waterfall. This will actually result in an overall ad monetization decrease. On the right hand side you can see what happens when you allow performance campaigns to get the first few impressiosn of every user.

image

The ad monetization difference in this example is pretty big. On the left side your average eCPM of all networks will be $4.9 while on the right side, the average will be $6.1. That’s a 24% revenue increase. The eCPM boost on the performance campaigns will be even higher – 57% lift.

Leave room for real time bidding (RTB)

Once you have a fixed CPM commitment, you would need to configure it in the waterfall using your mediation platform. You should keep in mind that there are 3 types of networks you are configuring:

  1. Network with Fixed CPM commitment
  2. Network with rev-share deal paying based on performance
  3. SSP SDKs that provide real time bids for impressions they serve

Unlike #2, ad responses coming from #3 would have a specific CPM value attached to them. Let’s consider 2 cases:

  • The fixed CPM of #1 is $7 and the real-time bid of #3 is $6 – in this case you would want to give the impression to network #1
  • The fixed CPM of #1 is $7 and the real-time bid of #3 is $9 – in this case you would want to give the impression to network #3.

You should configure your mediation platform to allow high bids to win against the fixed CPM if you know that the bid is real CPM and not eCPM. The setup of every mediation platform is a bit different but they all have a way to do it. You should also keep in mind that most mediation platforms would also have their own real time bidding so even if you didn’t add external SSP, you should still allow room for RTB.

 

If you want to analyze the ad monetization you are making on each ad impression you should check out SOOMLA Traceback – Ad LTV as a Service

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3 Comments

  1. Stefano

    June 13, 2016 at 3:59 pm

    Hey Yaniv, interesting post summarizing the day by day of optimizing your inventory with ads mediation. Just one question: wouldn’t the steps suggested in “Configure your ad mediation around CPM deals to boost ad revenue” break the IO deal of guaranteed CPM for top priority? you are not giving any more top priority to the network who guaranteed the CPM in exchange for it

    Reply

    • Yaniv Nizan

      June 13, 2016 at 4:18 pm

      Hi Stefano, that depends on the terms of the IO. If the ad-network uses CPM floor, it’s only fair that the publisher will be able to use CPM roof. Otherwise the ad-network only takes the cream and the CPM commitment is hurting you instead of helping you.

      Reply

  2. […] that the ad-networks makes. Sometimes it can be even more. This means that there is usually room to increase your ad-revenue simply by negotiating better , selecting the right providers and smartly managing the mediation waterfall to keep the […]

    Reply

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