vCPM vs CPM: The Critical Factor Publishers Have to Know

Updated on: July 13, 2023
vCPM can be more expensive than CPM because advertisers are only paying for viewable impressions.

The digital advertising industry can be pretty confusing, especially when it comes to figuring out how you want to get paid for your ad inventory. There are a few options, like CPM and vCPM, but don’t worry – we’re here to help.

In this blog post, we’ll explain these terms, review their differences, and help you determine which payment model best fits you and your business.

What Is CPM?

CPM, or cost per 1,000 impressions, is the average cost of website advertising. It is a common metric that gives advertisers insight into how much they spend on each thousand views (or impressions) of their campaign. 

To calculate CPM for an ad, you need to divide the cost of the ad placement by the number of times the ad was displayed (also known as impressions) and then multiply that number by 1,000. For instance, if an advertiser pays $100 for 10,000 impressions, the CPM would be $10.

Using CPM in advertising has several advantages. It enables you to get compensated for views rather than clicks or conversions. CPM is also a simple and effective metric that you can use to compare the cost-effectiveness of various ad campaigns.

So, if you’re working with advertisers who want to get their ad in front of a lot of people and they’re not as concerned with whether or not users actually interact with it, CPM might be a good option for you.

What Is vCPM?

vCPM stands for viewable CPM and is a new form of media selling and buying that calculates the cost of an impression based on viewability.

Viewable impressions can be seen by a user for at least one or two seconds for display and video, respectively. If a banner or video ad is not viewed for at least one second, it is not a viewable impression.

Viewability has been a hot topic in the digital advertising industry for some time now. It’s becoming increasingly important to know how many people see the ads and whether they’re actually paying attention to them.

To address this issue, vCPM (viewable cost per thousand impressions) metric was introduced, allowing advertisers to pay only when users on mobile devices and desktops view their ads.

The formula to calculate vCPM looks like below:

vCPM = Total Advertising BudgetActual Impressions + Ad Viewability1000

In the past, many publishers have been using the CPM metric as a way to calculate revenue. While this can be beneficial for advertisers who want to know how many actual users are viewing their ads, making it less reliable.

vCPM allowed them to pay only for viewable ads on the user’s browsers and earn more revenue for publishers.

Differences Between vCPM and CPM

The main difference between vCPM (Viewable Cost Per Mille) and CPM (Cost Per Mille) is that vCPM measures the cost per thousand viewable impressions, while CPM measures the cost per thousand impressions, whether they are viewable or not. vCPM is a more precise and transparent metric as it only considers impressions that are visible to users.

Another difference is that vCPM requires a minimum ad viewability threshold, whereas CPM does not. Advertisers only pay for viewable impressions with vCPM, which can lead to higher costs per impression and potentially more effective advertising campaigns.

In situations where one may be better than the other, vCPM may be preferable for advertisers who want to ensure users are actually seeing their ads, as it provides a more accurate measure of ad visibility. On the other hand, CPM may be preferable for advertisers who want to reach a larger audience at a lower cost per impression without necessarily focusing on ad viewability.

Ultimately, the choice between vCPM and CPM depends on the specific goals of the advertising campaign and the target audience. Advertisers should consider factors such as ad placement, ad format, and the type of audience they are trying to reach before choosing between the two payment models.

vCPM or CPM: An Overview of Their Differences

CPM and vCPM are essentially the same things — a metric used to measure the cost of an ad in terms of getting a thousand views of that ad. While they may seem similar, you should understand some key differences before choosing one over the other.

Metric CPM vCPM
Definition Cost per thousand impressions Cost per thousand viewable impressions
Calculation Total cost of campaign / Total number of impressions x 1000 Total cost of campaign / Total number of viewable impressions x 1000
Meaning Measures the cost of displaying an ad, regardless of whether it’s viewable or not Measures the cost of displaying an ad that’s viewable to users
Use case Commonly used for display advertising Used when advertisers want to ensure users actually see their ads
Benefits Simple metric Provides a more accurate measure of ad viewability

So Which One Should Publishers Choose?

vCPM or CPM? This is a question many publishers face when trying to decide which pricing model to use. The answer isn’t a straightforward one, but also simple enough for anyone to understand.

It depends on the ad campaign’s specific goals and needs. CPM is based on each time an ad is displayed on a webpage, regardless of whether it is viewable, while vCPM is based on the cost of each viewable impression. 

Therefore, CPM may be better if the advertiser aims to increase brand exposure and reach a wide audience. However, if they aim to maximize the number of viewable impressions and understand engagement with the ads, vCPM would be the more appropriate choice.

FAQs

What Is the Difference Between CPM and vCPM?

vCPM stands for “viewable cost per thousand impressions,” which charges advertisers only for viewable ad impressions to users. CPM stands for “cost per thousand impressions,” which charges advertisers for every thousand ad impressions, regardless of viewability.

Why Is the vCPM Pricing Model Better Than the CPM Model?

The vCPM pricing model can be considered better than the CPM model for several reasons. First and foremost, vCPM charges advertisers only for viewable impressions, meaning that users actually see the ad. In contrast, the CPM model charges advertisers for every thousand impressions, regardless of viewability. This can result in wasted ad spending on impressions not seen by users.

What Is a Good vCPM?

A good vCPM (viewable cost per thousand impressions) can vary depending on the advertising goals, industry, and target audience. Generally, a good vCPM can be considered one that is cost-effective and provides a high return on investment (ROI) for the advertiser and ad revenue for the publisher.

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