Model Brand Advertising Revenue: CPMs & Sales

This article discusses the importance of understanding the intricacies of modeling brand advertising revenue, particularly in the context of in-video advertising. It explores how to move beyond a simple CPM * impressions calculation to incorporate the nuances of brand advertising sales and how to accurately model sales revenue.

• The author debunks the fallacy of directly calculating revenue using a simple CPM * impressions / 1000 formula.
• The article stresses that brand advertising is often demand constrained, requiring dedicated sales teams and enterprise sales techniques to maximize revenue.
• It underscores the importance of accurately modeling advertising sales considering various factors such as campaign size, ad networks, sales team, and inventory type.

Why Traditional CPM Calculation is "Wrong"

The article explains that the traditional method of calculating advertising revenue (CPM * impressions / 1000) is misleading in the case of brand advertising. Brand advertising relies on a demand-constrained model, where the sale of advertising inventory is primarily driven by the efforts of a dedicated sales team.

• Brand advertising revenue is influenced by the number of campaigns sold, the size of each campaign, and the brand CPM.
• The article emphasizes the analogy of an enterprise sell, where revenue scales proportionally with the size of the sales team and their ability to secure campaigns.

Modeling Brand Advertising as an Enterprise Sell

The article proposes a more accurate method of modeling brand advertising revenue by treating it as an enterprise sell. This approach involves breaking down the advertising revenue into two key components:

• Brand Revenue: Calculated by multiplying the number of campaigns sold by the average campaign size and the brand CPM.
• Direct Response Revenue: Calculated by multiplying the total impressions minus the brand impressions by the remnant CPM.

Understanding the Importance of Inventory Type

The article highlights the significance of understanding the various types of advertising inventory and their characteristics. It acknowledges that advertising inventory can differ based on its placement, location within the user's experience, and other factors.

• Different channels and placements often have distinct CPMs and yield different revenue results.
• Accurately modeling advertising revenue requires segmenting inventory by type and analyzing its performance metrics.

Key Takeaways for Optimizing Advertising Revenue

The article offers several key insights for optimizing advertising revenue, particularly in the context of brand advertising:

• Understand the demand-constrained nature of brand advertising and adopt an enterprise sales approach.
• Accurately model advertising revenue by factoring in campaign size, sales team effectiveness, and inventory type.
• Leverage detailed inventory analysis to understand the different characteristics of advertising placements and optimize CPMs accordingly.

Conclusion

The article provides a comprehensive overview of the nuances of modeling brand advertising revenue. By moving beyond simplistic CPM-based calculations and embracing an enterprise sales approach, publishers and advertisers can more accurately model advertising revenue, optimize their sales strategies, and maximize their earnings.

It underscores the importance of a nuanced understanding of the advertising landscape and encourages readers to consider the intricacies of inventory type, campaign performance, and the impact of sales team size on overall revenue generation.