Impressions or Installs?
Posted on April 1, 2008
Posted by Mike Berkley
I’m really amazed that very little has been written on the differences between a CPM model (cost per thousand impressions) and a CPI model (cost per install) for widget monetization. This is a fundamental decision for any widget provider or ad network.
First, a quick review of the models:
CPM: the advertiser pays $X every thousand times their widget is displayed on a web page. This is the conventional banner ad model.
CPI: the advertiser pays $X every time their widget is embedded (”installed”) onto a web page. This is a new model.
A single “install” will lead to multiple “impressions”, and is generally much more valuable than an impression, by at least an order of magnitude. Here are some common advantages of a widget install:
- real estate (the widget owner now controls a portion of the web page the widget was installed on) ,
- ambassadorship (the widget installer is now exposing the widget content to his/her friends).
- a higher degree of user engagement with widget content.
It’s important to consider the platform(s) in which the widget campaign will take place. MySpace and Facebook are radically different, which ought to impact the decision about pricing model.
MySpace is a broadcast platform, where Facebook is more oriented towards personal consumption and selective sharing. One analogy is that a MySpace page is like a big movie theater while a Facebook page is like a private living room.
Because of MySpace’s broadcastiness, it has proven to be a great venue for bands and artists to build fan communities and expose their music and videos to the masses.
We have found that the CPM model is typically a better fit for MySpace, where the number of impressions tend to outweigh the level of engagement (similar to TV, radio, outdoor, etc).
Facebook, on the other hand, is a “social utility”, a friend-to-friend communication platform. Generally, Facebook users stay on their own profile page, while keeping current with friends via the news feed and messaging. Facebook is also a “walled garden”; only members of your network are allowed access to your profile page, whereas in MySpace your profile is public to any and everyone by default.
We have found that the CPI model is typically a better fit for Facebook, where the level of engagement outweighs the number of impressions (similar to software).
This has been our experience. I’d love to hear other perspectives on this issue.
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Great way of putting it Mike. We’re doing various things with social networking systems and viral video. Right now our system is mostly with the broadcast arenas like myspace. Which of two types do you think is going to grow. Why do you see is the next broadcast like space/site to be big? Congrats on your recent success.
One of the beautiful things about Splashcast is the ability to have users syndicate other users shows. I’ve had a lot of success with getting users to add my shows into their own players, but that hasn’t brought in mega-view counts. There are probably multiple reasons for that, which could be improved by Splashcast. I do believe that receiving as many installations as possible is much more beneficial than how times it’s viewed on a site.
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