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Part 4 - A History or RPM

20191007_rpm And yet another RPM variation....

Please click on the below link to view the first three parts of A History of RPM:
Part 1 - A History of RPM
Part 2 - A History of RPM
Part 3 - A History of RPM

Some people have mistakenly thought that if another player is involved in the chain (eg. someone like ParkLogic) then the margin that they take will consume any benefits. This couldn’t be further from the truth as companies such as my own play more than just a revenue increase, we also manage downside risk.

To understand this hidden benefit, we need to return to the RPM formula from Part 1 in this series. At ParkLogic we effectively have an RPM for every domain, at every monetisation company at every point in time. In fact, many years ago I coined the term normalised RPM (nRPM) as the unit of measurement for every monetisation source.

This means we actually know who is paying the most for any domain at any point in time. We then route the traffic to those destinations so that ParkLogic customers achieve a greater yield for their traffic.

As a by-product of this process we also manage downside risk. For example, if a domain is being paid an nRPM of $10 at one provider and $9 at another we would rightly route the traffic to the $10 provider. Suddenly the $10 provider loses a key advertiser and is now paying $2. If you were leaving the traffic at a single provider, then you would get the $2 but with ParkLogic the traffic will automatically flow to the $9 provider. This dramatically smooths out these types of market disruptions and reduces the risk for the domain investor.

Now here’s the problem with all of this history and discussions about RPM. When you deal with direct advertising networks, they have another type of RPM altogether….and it’s a difficult one to crack and it highlights the difference between a spot price and an average price.

Inherent in the RPM formula that I outlined in article one is the concept of time. We are getting the RPM for a domain name over a month, a week or a day. Since Google only reports on a daily basis then the shortest period of time we can get a confirmed RPM for is a single day.

To illustrate what I’m talking about in a simplistic manner let’s imagine you have a domain with four pieces of traffic that are paid the following amounts $0.1, $0.1, $0.2 and $0.6 for a total of $1.00. This provides us with an average earnings per piece of traffic of $0.25 (ie. $1.00 divided by 4). If a direct advertiser offers to pay $0.3 for the traffic, then we should provide it to them. Correct?

The problem is that with real time bidding networks they don’t offer to pay $0.30 for all the traffic they may decide to pay $0.30 for only the piece of traffic (ie. the spot price) that was previously getting $0.60. Since we are only dealing in daily averages, we actually don’t know that there was a $0.60 click and this is the piece of traffic the direct advertisers are offering $0.30 for.

The bottom line is that you end up with a suboptimal solution and leave money on the table. If you’re thinking that sending traffic to direct advertisers is trivial then think again…..they’re smart and they want the best quality but not always at the top price. This project took us over two years to crack and get right….it was a real doozy and one that we believe sets ParkLogic apart.

Just recently I wrote about a new monetisation platform that we’ve developed called ParkLogic Sites. There is nothing that looks like domain parking about it and we have the goal to completely transform the RPM metric by adding a key variable into the mix…..the end user. I will write more about this in the coming months head.

I’ve been tracking the history and uses of RPM for nearly twenty years now and it’s one formula that will keep on evolving and impacting all of our businesses into the future. One thing that I have learned is that through understanding RPM you are able to generate greater revenues.

I hope you have enjoyed this series of articles on the History of RPM. It's been interesting for me to reflect on how it's been there since the beginning. Initially as a simple metric and finally evolving into something quite imposing. Please feel free to contact me if you have domain traffic that you would like to extract additional revenue from.

Saturday Musings - Reflecting
Part 3 - A History of RPM

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