Industry Perspectives

Everything you need to know about the new currency of online advertising, Viewable CPM (vCPM)

Blog Post
The AppNexus Team


At last year’s New York Summit, AppNexus announced it was now possible to buy and sell inventory based exclusively on viewable impressions using AppNexus Deals. While the technology behind it is extensive, the concept is fairly straightforward: viewable impressions are a new method of trading that ensures that buyers only pay for impressions that are verified as having been “in view” for an actual audience. Essentially, AppNexus has deployed a new, quantifiable trading currency: “Viewable CPM”, a metric that runs as much as on trust and transparency as on dollars or euros.

What’s the difference between standard CPM and Viewable CPM?

Impressions are counted when they are served to the user’s computer. The page where the impression is served may be hidden, or the banner may be down the page and the user does not scroll down.

To make an analogy with print, served impressions correspond to the number of printed newspapers (which one can decide to buy or not, as well as choose to read or not).
CPM corresponds to how much you pay to get these impressions delivered, without knowing whether someone actually has even had the opportunity to see the ad.

In contrast, Viewable impressions (vCPM) are counted only when the page they get served is visible, the page is served to a human being and at least 50% of the pixels of the banner are in view for at least one second.

So to continue with the print analogy, viewable impressions would be the equivalent of counting whether each page inside a newspaper has actually been read, if such a thing could actually be done for every single copy of a newspaper!

With Viewable CPM, you buy only the subset of impressions that fulfill of all the above criteria. In other words, you only pay for actual moments where people see the ad.

CPM and Viewable CPM are two different concepts altogether, in the same way that CPM and CPC are. When buying for CPC, you can’t say, “I want to pay the same CPM as before, but only for clicked impressions!” Similarly, using the concept of Viewable CPM, you can’t say: “I want to pay the same CPM as before, but only on viewable impressions!”

In a real-time auction, choosing to bid with a low Viewable CPM would result in losing most bids.

Is there a link between CPM and vCPM?

There are multiple and consistent ways of calculating vCPM:

Viewable CPM = 1000 x Cost / (number of viewable impressions)

Viewable CPM = CPM x Total Impressions / (number of viewable impressions)

Viewable CPM = CPM / (percentage of viewable impressions)

The following graph shows CPMs and Viewable CPMs per viewability bucket (1%-100%).



Per Vewability Bucket (0%-100%)

From the chart above, one can see readily that today’s CPMs do not correlate well with actual viewability. You don’t pay a lot more for 80% viewability than for a 40% viewability rate, even though you get twice as many viewable impressions with 80% as opposed to 40%!

To take another extreme example, when a mere 10% of impressions are viewable, you need to buy ten impressions to get one viewable impression. So, the Viewable CPM stands ten times higher than the CPM.  This explains the shape of the curve on the top left of the chart.

And finally, a simple reminder: on average, half of impressions are viewable. In other words, on average, Viewable CPM gets counted twice as high as the CPM.

How should you use Viewable CPMs?

First, you need to forget almost everything you know about CPM…

Viewable CPM only applies to viewable impressions. In other words, non-viewable impressions don’t even have a Viewable CPM rating.

Given that the standard definition of a viewable impression is that 50% of pixels are in-view for at least one second, the following cases can happen:

  • An ad where 49% of pixels are in-view over the course of 20 seconds can be clicked, even though it is not recorded as “viewable.”
  • People may sometimes recognize a product if they see the ad a fraction of a second, which, again isn’t recorded as being “viewable.”
  • Buyers may have additional CPM-related costs (cost for their ad-server, their data segments, etc.), so they still need to check the total number of impressions served (both viewable and non-viewable).

But these limitations remain the exception, not the general rule of thumb.

In a Viewable CPM marketplace, a very good approximation is to say that non-viewable impressions simply do not exist. So the following statements are almost always true:

  • Non-viewable impressions cannot be clicked
  • People “exposed” to non-viewable impressions cannot be influenced by the ad (they simply don’t see them!)
  • If someone happens to convert after being “exposed” to a non-viewable ad, this would be counted as pure coincidence.
  • Accidentally buying a lot of non-viewable impressions would not be a problem – since a buyer would only pay for the impressions that people actually viewed.
  • The concept of viewability rate would not be relevant when one only paid for viewable impressions.

Relying on these statements helps avoid the most common mistakes when dealing with Viewable CPM.

What are the main takeaways for leveraging Viewable CPM?

When buying or selling using Viewable CPM, you should keep the following facts in mind:

  • One can accept low-viewability rates so long as their Viewable CPM remains good. For instance, one gets a better Viewable Deal with 10% viewable impressions at $0.1 than with 90% viewable imps at $2. The first instance has a Viewable CPM of $0.1 / 10%, which equals $1. The second has a Viewable CPM of $2 / 90%, which amounts to $2.22.
  • Conversions that occur after a non-viewable impression are considered fortuitous and technically should not be credited to the campaign. You should consider revisiting your attribution models if you trade in Viewable CPM.
  • Sellers should not think of non-viewable impressions as “money wasted”.
    In a Viewable Deal, the Viewable CPM compensates non-viewable impressions. These aren’t paid, but those viewable impressions get a better price.
  • Viewable CPM is a limited risk for the seller. As opposed to clicks or conversions, viewability depends exclusively on the media (page content and layout), not on the ad (message, product, advertiser website, etc.). Viewability varies very little between campaigns, or even between segments of users.

As with all new concepts, it will take time for the industry as a whole to adjust and adopt vCPMs as a common metric and “currency of trust.” It is hard, after all, getting rid of long-lasting habits. That said, we all remember a time (not so long ago in digital history) when “hits” to a webserver domain were considered “quantifiable enough” that they were fit to serve as a “standard unit of measurement” for website traffic. Today, of course, such an idea seems patently absurd.

As with all things in marketing, the proof of vCPM will be in its practice. Our own sense is that the more time buyers and sellers spend conducting transactions using viewability as a standard metric, the sooner the chances are that they will adapt and advocate these standards. Ultimately, the whole online advertising market will get used to using Viewable CPMs.