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Cookie Age vs. CPM

As cookie usage continues to be applied toward campaign optimization and success, network advertising has grown to astronomical levels.  Behavioral Targeting practices use cookies to tag and uncover users that have traversed our sites and/or content relevant to our industry.  Javascripts recognize those users and allow us to present our online advertising specials, offers, discounts, etc to the user who has exhibited this behavior.

On the surface, re-marketing looks like a no-brainer for online marketers.  But as you dig deeper into cookie expiration dates, brand placement and view/click metrics you start to get a much more interesting picture.  Users that are re-marketed to are done so based on their behavior at a certain time.  Say, for instance, you are looking for a last-minute birthday present for your mom (as I typically am).  Several sites are visited with the purchase (conversion) taking place within a couple days.  How does this impact advertising expense?  A lot.

Right now, most network advertisers are paying a flat CPM for impressions that are retargeting users.  Many conversions are going to take place within a few days, yet the cost is the same for the duration of the campaign.  Ideally, the goal to optimize your efficiency in ROI would be to pay the premium cost for impressions early in the campaign, but reduce that cost as the cookies age.  You’ll see that the number of conversions drops dramatically over time which means that the cost should be less to bring those conversions about.

Dapper, who I’ve been following closely over the past couple years, came out with a study and presentation around this very issue.  It reiterates what many of us already know but breaks it down into a clean, simple overview.  Check it out here.  And “kudos” goes to the first online advertising network that reshapes their busienss model around “dynamic CPMs”.