You Get What You Pay For — How to Think About Your Programmatic Budget

by | May 10, 2019 | Education, Impressions

Is it too good to be true?

Everyone is familiar with the proverbial phrase “If it sounds too good to be true, it probably is!” When it comes to your programmatic budget, this couldn’t be more true.

Due to the ever-changing nature of the digital media ecosystem, it can be tough for media teams to keep up with best practices, the latest tech, fair pricing, etc. It’s common that brands and agencies are sold an unfamiliar solution in a black box, without truly knowing what they’re getting for their money.

There’s really nothing simple about digital advertising. In the early days, the promise of this industry was clarity, trackability and transparency. Over time, that promise slowly dwindled as the amount of metrics advertisers could track grew and managing that plethora of data became more and more difficult.

So, when it comes to your programmatic budget, how do you truly know what you’re getting for your money?

Setting the Right KPI Expert Guide Subhead: Educate

Ask the right questions.

Whether you’re new to the programmatic landscape or a seasoned vet, it can be tough to know what questions you should be asking to ensure you’re setting yourself up for success. The important thing to remember is that there’s no such thing as a one-size-fits-all solution in the digital advertising world.

Setting the Right KPI Expert Guide Subhead: Educate

Does your programmatic budget make the cut?

Once you’re able to answer all the necessary questions, it’s important to determine if you can reach the goals of your campaign with the available budget. The last thing you want to do is set yourself up for failure right out of the gate by having unrealistic expectations and insufficient funds.

You can approach budgeting one of two ways:

1. Define what you’re trying to accomplish then do the homework to determine how much that will cost, or

2. Lay out a budget then determine the best use of that spend based on what you’re trying to accomplish.

Generally, going with the first strategy is almost always the best bet. An example of how this can play out:

Your objective is to raise awareness for your brand across a broad geographic area, but you have a tight budget. You go with the second option, lay out your budget and decide pursuing a low CPM (cost per 1,000 impressions) will get your brand seen by the most people while staying within budget. However, a lower CPM can mean that you’re buying lower quality inventory (i.e., ads placed where they won’t make an impact).

With the same objective, you decide to go with the first option. Your best bet strategy-wise is a highly localized approach, so you geofence a bunch of local businesses and drive traffic to your website. In this case, you would pay a higher CPM because restrictive geos limit available inventory and naturally drive up the cost of buying media. Even if you’re paying a higher CPM, the results are much more likely to be relevant to your objective.

A few other factors that can affect campaign pricing other than geographic targeting are:

  • Private marketplace deals with specific publications
  • Premium inventory
  • Third party verification such as brand safety and fraud protection

All these additions can add value to a campaign. They help ensure the inventory you’re buying is worth buying. But it’s important to remember that they come with a price tag.

Could you get inventory for $2 CPMs? Sure! Would you be happy with the quality of the inventory available at that rate? Not likely. At the end of the day, if you’re promised the world at a discounted rate, I’d question the true quality of what is being provided.

Setting the Right KPI Expert Guide Subhead: Educate

Set expectations early on.

One way to ensure your vendors and partners have your best interest at heart is to sit down with the team prior to launching a campaign and clearly define success.

Define a key performance indicator (KPI) that will serve as one of the main ways to measure the health of your campaign. It will be the constant for both parties to compare on a daily, weekly, or monthly basis.

Based on what you’re trying to accomplish, and what channels you’re using, your KPI could be anything from clicks to video completion rates to form fills or even phone calls.

No matter what it is, make sure everyone is on board with your KPI and are actively doing their best to optimize towards it in a cost-effective way.

Setting the Right KPI Expert Guide Subhead: Educate

Finish strong.

Long story short, get to know your potential media vendors and partners. Learn about their processes and figure out if they are a good fit for your team before making a commitment.

You need a partner you can trust — someone you know is being honest with you. Ask the right questions.  Determine realistic expectations based on available resources.

Remember that the cheapest option isn’t always the best option. Set yourself up for success.

For more insights into the intricacies of digital advertising, subscribe below or schedule a demo to speak with a LumenAd expert.

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