Cost Per Thousand (CPM) is the most common way organizations buy digital advertising: the advertiser pays for the number of impressions an ad accumulates on a publisher's site. But not all CPMs are created equal, and the model isn't always structured in the advertiser's favor.
Spoiler: the CPM model tends to favor the publisher, ad seller, or media buying agency — not the advertiser.
The Good
A well-functioning CPM model is one where the advertiser buys directly from a publisher. The price is the price, typically the standard rate for all advertisers on that publication, and it's transparent: the publisher's rate card lays out the full menu of options.
The Bad
In a programmatic environment, the media buyer enters an auction, competing with multiple parties bidding on the same impressions. The buyer can't guarantee what price they'll pay, since it fluctuates based on targeting, supply, and demand.
That uncertainty creates an incentive: media buyers and agencies tend to protect themselves from a higher-than-expected price by charging a higher CPM upfront. This model protects the media buyer and drives up the cost to the advertiser.
The Really Bad
The media buyer is incentivized to buy impressions at the lowest possible cost, since a lower cost means a higher margin for them. The advertiser, meanwhile, never sees the true cost of the impressions actually purchased. That lack of transparency creates an inherent conflict of interest between buyer and advertiser.
The Solution: Budget Buying
A better model for buying programmatic digital advertising is a budget buy: the advertiser pays a flat percentage fee based on their overall ad budget, rather than an opaque per-impression markup.
With this model, the fee is transparent and fixed, and the advertiser knows exactly how much of their budget is actually buying media versus paying for services.
Comparing the Models
Using a sample $10,000 media budget, budget buying delivers meaningfully more impressions for the same spend, since more of the budget goes toward media rather than absorbed by fees that scale with a fluctuating CPM.
Based on client campaigns, budget buying has driven roughly a 66% increase in buying power and a 66% increase in delivered impressions compared to a traditional CPM model at the same budget.
Try It Yourself
Use our free Budget Calculator to see how your current ad buy stacks up, or schedule a call to discuss your specific requirements.