dCPM and CPM are the two different bidding models available in programmatic advertising. Here, I wrote the difference between dCPM vs CPM models. CPM stands for flat bidding model and dCPM stands for dynamic bidding or automated bidding. Choosing the right bidding model for your ad campaign is very important to achieve your goal more efficiently by spending low money.
Demand Side Platform gives the option to the advertisers to choose the automated bidding (dCPM) or Flat Bidding (CPM) to achieve their goal. If you an advertiser or a campaign manager you should know the difference between dCPM and CPM bidding method and when to use. Here you will get the exact answer for your questions.
SRIDARAN BASKARAN
Difference between dCPM vs CPM?
Here are the 5 key differences between dCPM vs CPM.
| dCPM | CPM | |
| Expansion | Dynamic Cost Per Mille | Cost Per Mille |
| Other Names | Dynamic Bidding or Automated Bidding | Flat Bidding |
| Bid Calculation | Automatically adjust the bid price to achieve the desired goal. But, it maintains the average price set by you. | It does not adjust the bid price and it’s fixed. |
| Goal | It has flexibility in bid adjustment. So, it can easily achieve the goal. | There is no flexibility in the bid adjustment. In some conditions, it can’t achieve the goal. |
| Suitable | Dynamic bidding is more suitable for performance oriented campaigns. | Flat bidding is more suitable for brand awareness campaigns. |
CPM [Flat Bidding]
CPM stands for “Cost Per Mille”. In Roman numerals, “thousand” is represented by M for mille (as in millenium). So CPM is the cost for 1000 impressions. If an advertiser sets CPM as $5 in their campaign, it means that they want to buy 1000 impressions at the rate of $5. So, we called the CPM bidding method as “Flat Bidding” method.
So the demand side platform bids every impression at the rate of $0.005 ($5/1000). This price will not be changed in the CPM model. So when this campaign reaches its overall budget of $10,000, this campaign will be delivered 5 lakh impressions. The effective CPM of this model campaign should be the same as the actual CPM.
dCPM [Dynamic Bidding]
dCPM stands for Dynamic Cost Per Mille. dCPM is a dynamic cost for a thousand impressions. In CPM model advertisers only bid at the rate of $5/1000=$0.005. But in the dynamic model this amount increases or decreases for every bid [Why – explained below]. So we called the dCPM bidding method as “Automated Bidding” method. If you are choosing dCPM bidding model, you should place the average CPM price and the goal. To reach that goal platform increases and decreases the bidding price for every single bid. But note that the average cost per thousand impressions will not be higher than $5.
Which bidding model advertiser should choose, dCPM vs CPM?
Every advertiser has different goals for their digital marketing campaign. For example,
(A) Toyota car company is running a campaign to create brand awareness for their new car. So they want to show their advertisements to 5 lakh people at the price of $4000.
(B) GRT jewel company is running a campaign to increase the business. So they want people to get into their website and see the new models and offers.
(C) Hotel Taj is running a campaign to increase online room bookings.
The goal for Toyota company is to create brand awareness by displaying ads to 5Lakh people. because they just want to show their advertisement to 5 lakh people. So campaign planners divide the overall budget into 5lakh impressions and keep that amount as CPM price. CPM = Budget/Impressions * 1000 = 4000/500000 * 1000 = $8. In this situation, the campaign manager runs an advertising campaign with a CPM price $8. So that they can meet the goal within the budget.
The goal for GRT Jewel company is to increase the website visitors. So, they want to show their ads to whoever clicks it and visits their landing page. That means the goal is CPC (CTR). In this situation, the campaign manager can choose the bidding model either CPM or dCPM. But note that if you choose the CPM bidding model then the platform doesn’t know your exact goal. So, it delivers the ads to the maximum number of people. Sometimes you may reach the goal (good CPC) or you may not.
If you want to instruct the platform to reach your goal then you must choose dCPM bidding model. Once you choose this bidding model platform shows an option to declare the desired goal. You can choose either CTR or CPC for this campaign.
The same explanation applies to the goal of Hotel Taj. But, for this goal the campaign manager should use dCPM as bidding model and set the goal as CPA and enter the CPA amount. For example, if they kept the CPA goal as $50 then the platform optimizes itself to get one action per $50. So, if you run a campaign with a budget $4000 then the platform tries to get 80 actions in total.
In which situation do we need to choose dCPM as the bidding model?
As i said above, you can choose CPM as the bidding model to achieve goals B and C but sometimes you may not. Because the platform doesn’t know the exact goal of your campaign.
Multiple advertisers from the same DSP or different DSP participated in Real Time Bidding auction to win the ad inventory. Let’s consider your campaign bidding model is “CPM” and your CPM price is $2. Your competitor’s price is $2.2. In this situation, you can’t win the ad inventory because your competitor quotes for a higher bid price. What do you think if you lose a good customer just by $0.2? Feel bad, is that correct?
In the same situation, if you chose the dCPM as the bidding model then the platform can alter the bidding price just above the competitor’s bidding price by its learning and winning the ad inventory. When you choose the dCPM bidding model you must give the Average bid price and the desired goal. If the platform thinks that the incoming bid comes from a user who meets the goal then it increases the bid price and tries to win the auction. Note that, at end of the time the campaign’s eCPM will be equal to the Avg dCPM price.
Conclusion
By reading this article, you must be aware the differences between dCPM vs CPM bidding models. Also, you learned when you should which pricing model. This will help you when you setup ad campaigns.
