I recently had the opportunity to drive a (rather old) Porsche, but for the first time which was so much fun. Especially as growing up in Israel there aren’t so many to begin-with. The guy who showed me the car told me – “look at the dashboard, you see how the main real-estate goes to the RPM and not to the speedometer like every other car? That’s because when you drive a Porsche it doesn’t matter how fast you drive, it’s all about how hard the engine is working, “Rounds or Revolutions Per Minute of your engine””.
Working in Content Marketing, and Media space at @Taboola, you get to talk with industry folks a lot about CTRs, CPCs, PageViews, Rev-Shares, Revenue, etc. But what’s most important?
Historically, the most important metric people went after was Revenue Per Mille (RPM). Publishers sold their site’s traffic similar to how TV slots are sold; per 1,000 impressions. Every 1,000 impressions advertisers paid a unit called Charge Per Mille (CPM). Most big sites still sell their traffic in that way, and whatever is not sold is given to remnant ad networks. Those are companies then aggregate slices of traffic among many websites, build “a network”, and sell 1,000 slots to advertisers and share revenue back with the publisher (via Rev Share).
Over the years, many ad-networks could not differentiate themselves anymore in terms of technology (measured by CTR) as the main technique everybody used was Contextual Algorithms (a way of matching items based on the text surrounding them). What happened was that if CTR didn’t matter anymore, the main differentiator became the amount of ads, and how high their CPC went. This is to generate the highest RPM (reminder, RPM = CTR * CPC).
From the publisher’s perspective the rev-share became the main metric as most ad-networks could pay roughly the same gross RPM.
Fast forward to 2012. Many years passed since that time, and these days companies have new and exciting ways to match between items, not to mention those items don’t have to be “Clean My Teeth” ads anymore and can even be real and interesting content, articles, images and videos from all around the web.
Should we care for rev-share, and CPCs or mainly for RPM?
Definitely RPM. 90% of $1 RPM is lower than 50% of $2 RPM. We’re facing a new world, new types of ads, paid content, new technologies, behavioral, social, data plays, new prices, and we all need single consolidated metric that remind us the gist of what we need to know. How much money we make per 1,000 impressions. Money in the bank. Not confusing rev shares, not super high CPC from questionable buyers, or even CTR per se. This is not because these KPI don’t matter, they do, but because only when you multiple them all together it translates into what publishers need to know. Net revenue. RPM.
Publishers manage their business much like Porsche manages their expectations with its drivers. Focus on the single KPI that matters on your dashboard. RPM.