Why Google Lowered The Minimum CPM

December 20th, 2005

On their Inside Adsense blog, Google explains why they lowered their site-targeted CPMs for Adwords customers to advertise on Adsense publishers.

Their explanation is:

To this end, the lowered minimum CPM for site-targeted ads allows advertisers to more accurately price their ad placements on a wider variety of sites.

What this basically means, is that a $2.00 minimum CPM was too high and advertisers weren’t using it because they were paying too much for the results. I tested site-targeting, and couldn’t find a single site that was profitable at the $2.00 minimum CPM.

They are correct that lowering the minimum is not necessarily bad for publishers because they’ll hopefully get more advertisers using it when they can put in a lower and more profitable CPM. So, a publisher who may be earning a $.50 eCPM overall would benefit from a $1.50 CPM site-targeted buy, whereas before they probably didn’t get a $2.00 buy.

My question is this, why even have a minimum? Since it’s an auction format, if an advertiser is more comfortable using a CPM, why not let them bid whatever they want? If a publisher has a $0.10 eCPM, they’d love a $0.20 CPM site-targeted buy. Putting a minimum in is just stupid, it’s a weak attempt at artifically inflating CPMs, and hurts the efficiency for the advertiser AND the publisher.

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Entry Filed under: Ad Networks, Advertising, Google, Random