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The CPM and Fill Rate Balance

Ryan Gauss
Posted on
By , VP of Product Development


CPM-Fill-Rate-Balance

Some publishers can be set in their demands for a specific CPM (revenue per thousand impressions) or fill rate (amount of impressions filled per ad opportunities). Although these metrics can be a useful gauge of performance, in truth they are just an ends to a means. The ultimate goal for a publisher should be revenue.

If a publisher wants to maximize their revenue, then they should give their ad operations company the flexibility to adjust the CPM and fill rate in order to earn the most revenue for them. If the ad operations company can shift the CPM higher or lower they can test how it impacts the fill rate and what the best mixture of CPM and fill rate is.

Here is an example of how the adjustment can be used to test for maximum revenue.

A publisher requests a CPM of $1 which when implemented results in a 10% fill rate. The publisher sends 1 million ad requests per month which results in revenue of $100:
1,000,000 x .10 = 100,000
100,000 / 1,000 = 100
100 x $1 = $100

The ad operations company is given flexibility to adjust the CPM to maximize revenue. They drop the CPM to $0.75 and see the fill rate improve to 20%. At the same volume of 1 million ad requests per month it now results in revenue of $150:
1,000,000 x .20 = 200,000
200,000 / 1,000 = 200
200 x $.75 = $150

The ad operations company then drops the CPM even lower to $0.50 and sees the fill rate rise to 25% for a monthly revenue of $125:
1,000,000 x .25 = 250,000
250,000 / 1,000 = 250
250 x $.5 = $125

The ad operations company learns that in order to maximize revenue they should set the CPM at $0.75.

Publishers like to proclaim how high of a CPM they can get for their site or app, but this is nothing more than an ego boost. Publishers should spend less time trying to get the highest CPM but instead focus on generating the most revenue, which could cause their CPM to drop but that should not matter.

Publishers should work closely with their ad operations company to develop a strong relationship and give them the freedom to play with their CPM and fill rate in order to maximize revenue. If they allow them this flexibility, then they may end of with less to boast about in terms of high CPM but may be able to quietly celebrate with a better bottom line.