Before getting into what a CPC campaign is, let us first go through what are the different types of campaigns that publishers can run using their Google Ad Manager. Publishers can mainly sell their inventory by either directly approaching advertisers, agencies and buyers and strike a deal which is called direct campaigns (guaranteed) or by participating in a dynamic bidding process via exchanges and SSPs which is called programmatic selling. Today we are going to discuss different types of direct campaigns and how we can improve yield through these direct campaigns.
In Google Ad Manager, primarily there are 2 line-item types while running direct campaigns – they are Sponsorship and Standard. These come under the direct campaign category because of their priority over other line items and the options they provide. Here is a table that depicts line items and campaign types before we get into the details.
Sponsorship line items are of highest priority and deliver ahead of all other campaign types. Sponsorship campaigns deliver a percentage of matching requests and are usually used for roadblocks or Cost Per Day (CPD) campaigns by most of the publishers. This is the only campaign type where you can run CPD and CPC (Cost per Click) campaigns. But this campaign type is not only limited to CPD and CPC campaigns but also you can run Cost Per Mille(CPM) campaigns.
Standard line items are 2nd highest priority line items that come after Sponsorship line items. This line item requires an impression goal to serve. So the main differences between a Sponsorship line item and a Standard line item is that sponsorship line item is always served ahead of standard priority line items and standard line items always require an impression goal to be specified in absolute number whereas sponsorship line items require an impression goal to be specified in percentage of total available impressions. Standard line items can be used only to run if it is a CPM campaign and to run CPD and CPC campaigns, sponsorship line items should be used.
Nowadays more publishers are opting for a feature from Google Ad Manager where they can sell their inventory directly to any advertisers or agencies without actually meeting them in person but by sending a proposal through ad manager called Programmatic Guaranteed or PG deals. If advertisers accept the requests, the proposal will be converted to either sponsorship or standard line items depending on the settings provided. This will ease the process of doing sales for both the publishers as well as advertisers.
Now let us discuss more about CPD, CPM and CPC campaigns.
CPD Campaigns: CPD campaign is a type of campaign where the publishers and advertisers agree upon a percentage of impressions on selected inventory and number of days it should deliver. There is no impression goal but CPD campaigns deliver whatever the percentage specified irrespective of the traffic fluctuations. Publishers will be paid per day and not based on the number of impressions the campaign delivers. For example, an advertiser may want to display his ads on 90% of a publisher’s inventory for 3 days. In this case this campaign will take precedence over all other campaigns and only after delivering 90% of the impressions, other line items are given a chance to deliver. Now imagine this scenario, if a publisher is a sports publisher and during a cricket match day, the traffic would be 3x to 4x of the traffic of a non-match day, hence CPD campaigns deliver 3 – 4 times more impressions at the same cost as cost was agreed upon per day basis. Effective CPM of the campaign can be calculated to measure the true yield of the campaign.
CPM Campaigns: CPM campaigns delivery depends on either it is set as a Sponsorship campaign or a Standard campaign. As sponsorship campaigns always serve based upon a defined percentage of impressions, if a campaign is set up as a sponsorship, it will deliver the percentage of impressions specified for the given time range. Publishers will be paid for the total number of impressions the line item has delivered.
If the campaign is set as a Standard line item, then it requires an impression goal, rate and time range. Again depending on the line item setting, impressions will be delivered either evenly, front loaded (deliver more impression on initial days of the campaign then gradually reduce) or as fast as possible. Here also, publishers will be paid for the total number of impressions the line item has delivered.
CPC Campaigns: CPC or Cost Per Click campaigns are those campaigns where advertisers agree to pay publishers only if a user clicks on an ad. In ad manager, CPC campaigns can be set up only using sponsorship line items. Hence while setting up the campaign, percentage of impressions, a time range and a rate per click will be specified. Publishers will be paid for the clicks received by the campaign. Now if the CTR is good, publishers may get good margins from CPC campaigns. But it is risky to run CPC campaigns if the CTR is poor.
Here’s the table which summarises the difference between CPM and CPC campaigns:
Most of the publishers we have worked with are hesitant to run CPC campaigns as they think it is quite risky. Because in CPM and CPD campaigns, most of the time publishers are sure to earn 100% of the campaign budget if the impression goal is met but in CPC campaigns, if the CTR is very poor, publishers are in the risk of losing a large amount of the actual yield.
However, in reality, when optimized properly, CPC campaigns can be profitable as well. Publishers need to take some basic steps to improve some of their basic metrics such as viewability, putting better ad sizes, ad location etc which in turn improves CTR. We have discussed a few of such metrics on our previous blog What advertisers expect from publishers while running their ad campaign?
Now let us see what makes CPC campaigns profitable and what should be publishers CTR so that it works out better than CPM campaigns. Let us assume a publisher who regularly runs CPM campaigns at a rate of US $2 CPM. So if there is a campaign to deliver 1 million impressions over a period of 10 days, the campaign will deliver 100,000 impressions each day for 10 days.
Now if you have to choose between a CPM campaign at a rate of US $2 CPM and a CPC campaign at a rate of US $0.5 CPC, most of the publishers choose CPM campaign because they think it is less risky, but if you do the back calculation, for the above mentioned CPC campaign, a CTR of 0.4% will yield an effective CPM of US $2. Hence if you can achieve any CTR that is above 0.4%, you are in profit over if you had chosen the above mentioned CPM campaign.
So if publishers are confident of their inventory that they can get more than the desired CPM, they can choose CPC campaigns which earn them more money and save impressions as well.
Tercept’s Direct Campaign Optimization technology can help publishers deliver 2x to 3x better CTRs using 30+ contextual and behavioral variables, churning TBs of data and applying machine learning algorithms to optimize campaign performance.
Vinay B Rao
Lead Analyst, Tercept