Impressions are usually indicated by the acronym CPM. CPM is “cost per mille”, meaning cost per 1 thousand impressions (mille is 1,000 in French). Many Connected TV (CTV) providers boast about a $35 or better CPM to reach entire neighborhoods of single-family homes. That is compared to around a $60 CPM for targeting with custom algorithms which find the in-market homeowners in real time.
At first glance, a $35 CPM might seem like a bargain compared to a $60 CPM. But in the world of digital advertising, it’s not just about the sticker price—it’s about what you actually get for your money. When it comes to traditional demographic targeting, the apparent low cost hides a massive inefficiency: spending money on impressions that don’t reach consumers who are in the market. What you need to care about are the number of effective impressions, meaning the number of impressions served to qualified individuals who are in-market right now.
Breaking Down the Costs
Let’s consider how all of this breaks out with a $10,000 ad spend in a city with 1 million homes.
Actual Cost Per In-market prospect
Assumptions:
- 1 Million homes
- $10,000 Ad Spend
- Here is the formula: (Ad spend/Cost Per Mille aka. Cost Per Thousand Impressions (CPM) to get to the estimated number 1,000 impression blocks at that CPM. Multiply that number by 1,000 to get to the number of individual impressions. The formula looks like this: (Ad Spend/CPM)*1,000
Traditional Targeting at a $35 CPM
- Total Impressions: Impressions=($10,000/$35) × 1,000≈285,714
- Effective In-Market Impressions:
- Only 60% are actual homeowners: (285,714×0.60)≈171,428
- Of those, just 4% are in the market, meaning only 4% of those are effective impressions: (171,428×0.04)≈6,857
- Effective Cost per In-Market Homeowner: Cost per in-market homeowner impression=($10,000/6,857) ≈$1.46 per effective impression.
Custom Algorithm Targeting at a $60 CPM
- Total Impressions: Impressions=($10,000/$60)×1,000≈166,667
- Effective In-Market Impressions: With our custom algorithms, nearly 100% of these impressions reach in-market homeowners: Effective Impressions≈166,667
- Effective Cost per In-Market Homeowner: Cost per Effective Impression=(10,000/166,667) ≈$0.06
The Outcome?
- Traditional Targeting: Approximately $1.46 per in-market homeowner.
- Custom Targeting: Approximately $0.06 per in-market homeowner.
The True Value of Smart Spending
- Cost-Effective Reach:While the CPM for our targeted approach is higher at $60, the cost per effective impression is dramatically lower. Instead of reaching only 6,857 potential customers when simply using demographic targeting, your $10,000 spend directly reaches 166,667 high-intent homeowners.
- Minimized Waste:Traditional methods result in 96% of your budget being wasted on consumers who are not ready to convert. Our data-driven approach eliminates this waste, ensuring that every advertising dollar contributes to meaningful engagement. In this example, it saves you nearly $1.40 per Effective Impression.
- Optimized ROI:It’s not about spending less; it’s about spending smarter. By investing in precision targeting, you’re not only reducing waste but also boosting conversion rates and maximizing your return on investment.
The Bottom Line
When you compare the cost efficiency, a $35 CPM might seem like a deal—but it’s deceptive if 96% of those impressions go to the wrong audience. Our custom targeting strategy, despite a higher CPM, ensures that your ad spend is optimized to reach exactly those homeowners who are in the market for your services. This means more meaningful impressions, higher engagement, and a far better ROI for your digital advertising campaigns.