At Flexpress, our partners are expert publishers, and we're inspired by them. Popular Science, Outdoor Life, and Field & Stream alone boast more than four hundred years of brand experience. Our goal with this "What is programmatic advertising" guide is to bring publishers up to speed using plain English about how programmatic advertising works, the benefits that it can provide, and the pitfalls to avoid.
The authors of this post have personally worked in digital publishing for more than sixty combined years. When done well, programmatic advertising serves as one of the levers at the publisher's disposal to rapidly increase revenue alongside audience. When done poorly, previously loyal visitors never come back and new visitors never find the content via Search.
We created this companion slide deck so you can follow along.
Programmatic advertising revenue =
[# of ad slots the audience sees] x
[price advertisers are willing to pay to appear in a given ad slot]
Mailchimp uses programmatic ads to earn sign-ups from popsci.com’s audience
Understanding the programmatic advertising real-time auction
Hand drawing / schematic showing the value chain for programmatic advertising
Outside of the publisher (supply), and advertiser (demand), there are three other links in the chain that that makes the auction process work:
Suppliers build technology to connect publishers to SSPs — and that technology creates value by managing these technical connections (uptime), lowering barriers for publisher entry (user experience), and/or optimizing configurations to earn the highest amount for a given inventory (integrated content + ads design).
In this Agency Holding Map by Eskimi, industry world, notice how companies generally work directly with the Advertisers, and then feed into Demand Side Partners (DSPs) or Private Marketplace (PMP) deals
CPM = revenue earned from 1,000 impressions of one viewable ad slot;
RPM = revenue earned from all viewable ad slots per 1,000 pageviews;
RPS = revenue from all viewable ad slots per 1,000 sessions.
Hand drawing illustrating the interplay between CPM, RPM, and RPS
You can learn more about what it is publishers are doing to manipulate CPM, RPM, RPS, and other programmatic advertising metrics in this article: Engineering Analysis: How Programmatic Advertising Companies Affect Publisher Revenue, but for fun let's do a brain teaser —>
You see on your site that CPMs are down while RPS remains up;
what should you do?
—————
Definition |
Calculation |
|
Gross Ad Revenue |
Ad revenue earned before revenue share/fees NB: publishers never / rarely see this number |
You can back into this calculation: |
Net Ad Revenue |
Money earned by the publisher after all revenue share/fees are deducted |
For flat-fee providers: |
CPM or eCPM |
Cost per thousand impressions; the amount an advertiser is spending to purchase 1,000 ad impressions on a given site |
Total [Net ad slot revenue / impressions] * [1,000] |
RPM |
Revenue per thousand pageviews; amount a publisher earns for every 1,000 views of a single page on a given site over a set time period |
Total [Net ad revenue / pageviews] *[ 1,000] |
RPS |
Revenue per thousand sessions; a "session" is essentially a "visitor" and thus this amount reflects publisher earnings from ads for every 1,000 visitors on the site |
Total [Net ad revenue / sessions] * [1,000] |
This table has specific definitions, as well as calculations to understand what is programmatic advertising, and how you can measure the performance of Ads
Diving deeper into CPM, RPM, and RPS
By monitoring the below KPIs ("key performance indicators) that drive CPM, RPM, and RPS, publishers can learn how to earn more revenue while encouraging return visits in the future.
Definition |
What does it impact |
|
Viewability |
The % of impressions that are actually seen (or viewed) |
Advertisers use viewability to assess the quality of the ad stack and value of the CPM. |
Fill Rate |
The % of available ad impressions filled by advertisers |
Better fill rates = more revenue. You want to sell all the inventory you have. |
Page Load Speed |
How long (seconds) it takes a page to load |
User experience impacts return visits, total time spent on site, and pageviews per session. |
Session Duration |
How long a visitor is on the site |
Longer session durations provide greater monetization opportunities, e.g. via ad refreshes after thirty seconds or so of on-site time |
Page Views / Session |
The number of pages a visitor goes to, on average, during a visit |
More page views = more ad loads and revenue per session. |
Bounce Rate |
The % of visitors who visit one page and then leave the site |
Lower bounce rates = more ad loads and revenue per session |
Impressions / Pageview |
The average number of impressions shown per pageview |
More ad impressions = more revenue, higher RPM and RPS |
The best way to increase revenue sustainably is to break down each of the metrics into its component parts, and then optimize:
Our goal with guides like this one is for publishers to feel confident answering questions about what is programmatic advertising revenue in front of investors, engineers, and advertisers. Too often editorial and revenue people lose each other in the fog.
Hit us up if you need the answers : )