How does Smart CPM help you optimize spending? This second-price auction algorithm automatically competes for the hottest placements and sets winning bids. But you don’t pay the highest price to win traffic but a little more than your next competitor.
Here’s a drained but complete guide to how you can use this pricing model by Adsterra, gaining the most relevant and rich traffic for your digital marketing campaigns.
How Smart CPM works and why it’s so beneficial
In this second-price auction model, the advertiser who offers the highest bid wins the competition for traffic. But unlike with the first-price auction, the advertiser doesn’t have to pay their bid: they pay a little higher price than a competitor coming after them.
Main benefit of the second-price auction
Such strategy allows you to buy the same volume and quality of traffic for a smaller budget. As an outcome, you will be getting traffic longer and distribute spending in the most optimized way. The second-price auction also helps enhance ROI, minimizing the investment in the most relevant traffic.
Top reasons to try Smart CPM by Adsterra
- Stay safe from overbidding and win traffic at the best price
- Automate bidding strategy
- Spend safely and keep costs under control, which is especially important when you’re on a budget
- Get the same average traffic volumes and quality as you could get with the highest bid
- Optimize traffic costs at the start
- Customize bids for selected placements without losing control over spending (Custom Bid).
An example of how Smart CPM saves money
Let’s imagine you target the US mobile audiences. Adsterra will estimate your competition and display the minimum bid for your targeting. Knowing the minimum cap, you can define the maximum price you’re ready to pay for 1,000 of ad impressions. Increase the bid and check how many impressions you will be getting: Adsterra’s Traffic Estimator will show the expected volumes.
We highly recommend you to avoid overbidding at this stage. You only set the desirable cap, but not the highest bid possible.
Once you kick off the campaign, Smart CPM will start entering auctions, helping you win auctions at the better price. If your bid wins, the algorithm will find the next highest bidder and adjust your payout so you could win the auction.The point is that you won’t have to pay the highest price and refresh bids several times to ensure you’re getting enough traffic. Finally, the bid required to win the auction will usually be lower than the cap you set.
To Contents ↑Example:
Supposing your bid is $2. Two more advertisers are competing for the same targets, and their bids are $0.8 and $1. Smart CPM will then place a $1.05, just 5 cents higher than the second highest bidder coming after you. Still, you will be getting the same traffic volumes as if your payout was $2, but pay only $1.05. Profit!
Smart CPM use cases
As we’ve finished with the benefits, let’s outline some use cases for Smart CPM marketing campaigns:
1. Conversion costs optimization
You’re satisfied with the quality and volume of traffic, but the cost of conversion is still high. By adding a bid cap, you start getting the same traffic volumes but at the second price needed to win the auctions.
2. Boosting traffic volumes from low-competition geos
When advertising in Tier-3 countries with lower costs for ad views and less stiff competition, you can embrace the highest amounts of traffic just by increasing your bid cap. If the average bid is, say, $0.2–0.5, and you set $1, all traffic will be yours.
3. Winning conversions when the competition is stiff
If you target a specific set of placements (a whitelist or allowlist) or put a very narrow targeting, you usually face fierce competition. You need this traffic as it’s of the finest quality, but you can’t guess how high the competition will bid. So you put the highest CPM rate possible but only pay the closest to second-highest bid amount.
A brief how-to part: How to enable Smart CPM
From your account, hit Campaigns > Create and scroll down to the Ad unit and Pricing type section. First, select the ad unit as it determines the pricing types available. Let’s agree we selected Popunder.
Pick CPM and then, activate the Smart CPM toggle. This will enable our algorithm to bid for you automatically.
Your next step will be the same as we described earlier: entering a bid cap for your targeting. When your bid wins, the algorithm will take the next highest bid and set it as your price, adding just 5 cents above. Your final payout will be lower than your initial bid!
To Contents ↑Ensure to run your test campaign for a while, on average, 5–7 days are enough. Avoid stopping your test in 24 hours or 2 days.
How’s better, with or without Smart CPM?
You’re familiar with CPM — it’s nothing but choosing a fixed rate for every 1,000 of ad impressions. If your bid wins, you pay exactly the amount you have set. The bid doesn’t adapt in real time, and you can’t save ad budgets if possible. But in this case, it’s you who holds the wheel.
Traditional CPM bidding specifics
- Manual settings demand time and strategic craft
- Traffic performance vastly varies, and you need to test traffic slices carefully
- You can test new geos and traffic slices with minimum bids only
- When your KPI is mainly a steady amount of traffic, you can keep it on the same level with a high fixed CPM rate
Smart CPM specifics
Adsterra’s algorithm will choose optimal bids an unlimited number of times. Risks are lower, since the whole process is automated. And you still can select the top-matching placements to add them to a whitelist later on.
To Contents ↑Tests and ad optimization with Smart CPM
When entering a new market or testing a fresh traffic slice, you aim to get conversions faster and spend less at the start. Smart CPM is like a magic wand here: it will collect as many ad views as possible, keeping your spending under control.
After running a test, you will only need to dive into stats to pick the most resultative placements to form a whitelist and launch a new campaign. Remember to add a token ##PLACEMENT_ID## to track conversions from every ad placement. Read more about S2S tracking in our expert guide.
What else? Campaign scaling can also become more effective. Scaling is about getting more traffic in terms of quality and quantity. When you scale, you nearly start testing new traffic sources again, which can be pretty risky. Well, Smart CPM will minimize potential pitfalls. It will discover traffic at affordable prices without burning your budget down.
To Contents ↑Focusing on the best-performing traffic
Smart CPM fits perfectly for obtaining more ad views from high-performing ad placements. Let’s make it more clear.
After running ads for a while, you can collect stats on how different ad placements perform (in case you added a specific token in the landing URL, of course.) What you need to do is to increase bids for placements that bring you more profits.
Open your campaign from the My Campaigns tab. Scroll down till you see the Advanced Settings section. Find the Custom bid section. Here you can enter the IDs of the placements you want to get more traffic from and enter an increased bid. This approach can drastically improve the campaign results making you greater ROIs.
Smart CPM will take into account your custom bids. Profit! The trick works in reverse, by the way. You can fix minimal bids for those sources that send the least profitable traffic. See all Custom Bid’s use cases.
To Contents ↑What to read to enhance your online marketing?
You may now feel a bit confused looking for “what to start with?” And you’re right. This guide uncovers a small piece of campaign setup magic. Let’s fix it right now. Adsterra experts have crafted detailed guides to help you out at any stage of your marketing strategy within our ad network. Give them a read.
- Get Finest Traffic Faster! Adsterra Campaign Setup Guide for Affiliates
- Are You Using Adsterra Targeting Settings Like a Pro? A Cheat Sheet for Affiliates
- Ad Campaign Optimization With No Frills. A Checklist for Affiliates
- CPA Goal Optimization: Pay Less for CPM or CPC Traffic Optimizing it by Conversions
Summing up
With Smart CPM, you pay the amount closest to the second-highest bid and save advertising budgets. Summarizing, here are the core advantages of this digital pricing model:
- Spend tangibly less time on bidding strategy
- Minimize spending on traffic while getting the same volumes and quality
- Enhance the efficiency of tests, campaign optimization and scaling
- Use combo settings to control daily spending or selectively increase bids for the best-performing traffic sources
- Spend less compared to classic first-price auction and stretch the time limits for your campaign
