Everyone's intimately familiar with the standard available pricing models for online advertising campaigns: cost per action (CPA), cost per click (CPC), and cost per thousand impressions (CPM). What's emerged in the industry along side RTB exchange technology is something called dynamic cost per thousand impressions, or dCPM.

For those yet unfamiliar, RTB stands for real time bid. The technology infrastructure allows demand side platforms or DSPs to participate in real time auctions for remnant inventory. When an ad call hits the auction from a publisher, the DSPs seated there analyze thousands of data points and decide in a millisecond whether to bid on the impression and at what cost.

A New Level of Performance
Selecting a pricing type and setting a bid on a campaign is what determines delivery and performance for that campaign. The most common pricing model has historically been CPM (cost per thousand impressions). A CPC (cost per click) pricing model is usually used for targeted campaigns where the goal is to drive traffic to a specific landing page. CPA (cost per action) pricing models are where an advertiser pays only for approved actions as defined in a contract with the publisher. These types are rare and typically only available to big brand advertisers with a proven track record of performance.

The Birth of the Performance Goal
When you run a CPM campaign, you can either set a bid for a straight CPM, purchasing a set number of impressions at a set price, or you can set a performance goal that the ad server will optimize toward, depending on the ad server and your service contract. The performance goal can be either a CPC goal (cost per click) or a CPA goal (cost per action).

In the second part of this blog series, we'll take a look at how and why dynamic CPM (dCPM) is a game changer in the performance goal playing field.