Every advertiser wants to increase conversions without violating its ROI goals. While this case study examines one campaign in particular, the story is universal across Right Media clients: moving from a static CPM to a dynamic pricing model removes typical inventory constraints and allows campaigns to deliver more efficiently.

Dynamic Pricing allows each individual impression to be priced flexibly, on every ad call, based on its true value to the advertiser. Instead of being optimized out of lower quality inventory, the advertiser can simply bid less for it. Instead of being outbid on higher quality inventory, the advertiser can offer to pay more for higher value impressions. Whatever the case, the system monitors ROI targets every time it sets a bid for an advertiser.

Goals and Method

• Goals of the two-phase test were to acquire new customers, and
• control CPA while maximizing conversions and scale.

The test looked at the performance of two ad units (300×250, pops) across two time periods of equal length (18-19 days) and scale (10-11mm impressions). The campaign was priced on a flat CPM in phase I, and a dynamic CPM in phase II.

Phase I

Not yet optimized, the campaign started at a high CPA and delivered broadly. CPA dropped progressively as the system learned and became more selective about when to serve. The campaign averaged around 9 conversions a day, and it hovered around this level as long as its static price restricted it from higher and lower priced inventory.

Phase II

Upon the switch to dynamic pricing, conversions skyrocketed. Instead of ruling out impressions of different value, the advertiser could now bid on them relative to that value, as long as its campaign targets were not violated.

Delivery increased, and the campaign garnered nearly 5x more daily signups, on average, than it did when it was priced statically. At the same time, CPA continued to trend downward as the system predicted response more accurately and got smarter about how to spend the campaign’s budget.

Summary

Once the client could pay according to value, instead of paying the same, flat price for every impression, the advertiser opened itself up to much more inventory and won considerably more new signups. Cost per user was controlled, and ROI was maximized on the campaign. While nearly every network started on the buy, only Right Media remained at the end.

This entry was posted on Wednesday, November 30th, 2005 at 12:00 am and is filed under Advertisers, Remix Media (Right Media Ad Network). You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.