The True Value of Premium Ad Buys vs. Standard IAB Inventory: A Data-Driven Analysis: Q-CPM – Quality CPM
By Gene Keenan
In programmatic advertising, media buyers often face a crucial decision: invest in low-cost standard IAB formats or pay a premium for high-impact, high-quality placements. On the surface, a $4 CPM Above-the-fold (A TF) IAB banner is more cost-efficient than a $30 CPM rich media ad unit. But when we look deeper, the economics of attention and effectiveness tell a very different story.
Why CPM Alone is Misleading
Cost per thousand impressions (CPM) is a baseline metric: It tells us what you paid, not what you got. It doesn’t account for whether an ad was actually seen (viewability), how often it was seen (frequency), whether it moved the needle on brand perception (brand lift), or whether users engaged (interaction) or clicked through (CTR).
To reach a Quality CPM , we need to factor in the cost of each meaningful exposure in those critical performance indicators.
The Quality CPM Formula
We built a model that calculates a True CPM based on:
- CPM Paid
- Viewability Rate
- Frequency Efficiency (ideal range: 3-5 impressions per user)
- Brand Lift Factor (compared to standard baseline)
- CTR Factor (CTR divided by average IAB benchmark)
- Engagement Factor (relative to baseline interaction)
Al-World Campaign Example
A recent campaign delivered exceptional results with the following metrics:
- CPM Paid: $30
- CTR: 0.25%
- Brand Lift: 10x standard IAB norms
- Engagement: 20x higher than baseline
- Frequency: 3 (ideal)
- Viewability: 85%
Benchmark: Above-the-Fold (ATF) IAB Placement
Let’s compare the premium campaign to a standard above-the-fold (ATF) IAB buy:
- CPM Paid: $4.00
- CTR: 0.08%
- Brand Lift: 1.5x baseline
- Engagement: 2x baseline
- Frequency: 4 (within ideal range)
- Viewability: 75%
When normalized and run through the True CPM model:
- ATF True CPM = $4.00 / (0.75 × 1.0 × 1.5 × 2.67 × 2.0) ≈ $0.50
- Premium Campaign True CPM = $30 / (0.85 × 1.0 × 10 × 8.3 × 20) ≈ $0.02
While the ATF IAB placement performs much better than BTF, the premium high-impact campaign still delivers over 20x the value per quality exposure.
What This Means for Media Planners
If you’re focused only on CPM, you’re almost certainly underestimating the value of premium inventory:
- Low CPM does not equal efficiency if viewability and engagement are low.
- Even standard ATF inventory, while better than BTF, falls short of premium performance.
- High-performing placements can outperform optimized IAB formats by orders of magnitude when normalized by quality metrics.
We recommend shifting from the traditional Cost-Per-Thousand to the more insightful Cost-Per-True Exposure. This shift will empower media planners and brands to make more informed decisions and optimize their advertising strategies. Media planners should use tools and models that evaluate:
- Actual viewability
- Controlled frequency
- Engagement depth
- Brand effect (e.g., lift in awareness or intent)
By calculating Quality CPM, media planners can make better business decisions, and justify the premium rates they are paying. This will deliver better business outcomes, which ultimately will deliver better results for your clients and increase client retention.
Ultimately, it’s not just what you pay; it’s the results you get. With premium ad buys, you get significantly higher value and a more effective advertising strategy.
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