EQ Journal

In an essay titled How to Measure the Value of Earned Media (http://www.eqjournalblog.com/?p=508), I looked at ways to measure Return on Investment (ROI) using a conventional methodology—CPM, Cost Per Thousand. Ryan Anderson, one of Canada’s leading experts on social media mentioned that I was underestimating the value of guerrilla marketing if I only looked at CPM. In other words, it isn’t enough to just know how many thousands of pairs of eyeballs have seen your stuff. The other dimension that needs to be measured is engagement.

This seems intuitively right to me; if someone reads an article about you or your organization because of a successful GM (Guerrilla Marketing) campaign your organization conducted, is that the same as seeing a mention of your enterprise in an ad somewhere? Probably not. The difference is the level of engagement with what he or she is seeing, hearing, reading or feeling when they come upon a mention of you or your firm.

I had an example of this yesterday. I was working with a student on her fashion and design startup; she is funding it, in part, with sponsorship money. She is constructing a CPM measure to demonstrate the value of these sponsorships for her partners. But it was also obvious that Ryan was right—the CPMs by themselves don’t tell the full story.

As she gets ready to take her new women’s fashion and design shop on tour of major cities in N.A. and elsewhere, her sponsors expect and will receive plenty of media mentions in RL (Real Life) and online. That’s the CPM side of things. But for her sponsors (perfume, jewelry, magazines, fashion bloggers, music publishers, wineries, distilleries, breweries, makeup, potions and lotions, etc.), they want more—they want engagement.

Now how would she generate that for her sponsors? Well, they are some simple things she can do. For example, she can give out samplers—of perfume, magazines, CDs, wines, spirits, beer, makeup, potions and lotions—at each of her events. You would have to agree that someone who tries your perfume on her skin is more engaged than someone who flips through a magazine and sees an ad for that perfume.

So how can she measure the value of this type of engagement? Maybe the advertising business needs a new measure, let’s call it CPMt.

CPMt might be a measure of cost per thousand views adjusted for the length of time that people interacted with or viewed the product or service.

So let’s say that a sponsor or advertiser was willing to pay $15 per thousand views, which is pretty typical for a good quality magazine or blog spot.

The typical view time for an ad or sponsor mention is around 200 to 250 milliseconds. This is enough time for most people to recognize facial expressions and absorb emotional responses. Reaction time for the average person is about 100 milliseconds. To also help you put this in perspective—most people won’t wait longer than 250 milliseconds for a page on the Internet to resolve. So a quarter of a second (250 milliseconds) is actually quite a ‘long’ time.

So a typical ad or sponsor mention would generate a CPM of: $15 per thousand views. But what if just 1% of all views were longer—say, long enough to dab some perfume on your wrists and behind each ear—30 seconds (i.e., 30,000 milliseconds)?

The impact is dramatic as we will see in a minute.

But first, let’s create a formula for CPMt.

CPMt = CPM / (t / 100,000 milliseconds)

where:

CPM is your conventional cost per thousand and t is the total viewing time or viewing and interaction time measured in milliseconds.

Now,

t = [(30 seconds/engagement x r x 1,000 engagements x 1,000 milliseconds/second) + (250 milliseconds/view x (1-r) x 1,000 views)]

where :

r is the proportion of engaged viewers versus normal viewers.

So the units for CPMt are costs per hundred thousand milliseconds .

I have made it easier for you—you can download a spreadsheet from our server in .xls format that will calculate CPMt for you: http://www.ottawarealestatenews.com/CPMt.xls. All you have to do is put in the CPM and the percentage of engaged viewers and CPMt numbers will be generated automatically.

You can also change the average duration of a typical view or the average time for engagement and this will give you your own estimate of CPMt.

In the example above, if each 1,000 views are typical ones (i.e., they last for 250 milliseconds per view), you get a CPMt of $6.00 per 100,000 milliseconds of viewing. If just 1% of views are of the longer duration type, the sponsor’s cost to produce 100,000 milliseconds of views is just $2.74.

Put another way, by directly engaging her audience in experiencing her sponsors’ products, my student entrepreneur can deliver a lot more value for the same investment.

When a sponsor invests $10,000 in her enterprise and assuming the appropriate CPM number is $15.00 per thousand, she would normally be generating 666,667 conventional views for them during the tour. But if 1% of her viewers are directly engaged, the adjusted number of views* jumps to a whopping 1,460,000. That is an increase in ROI for her sponsor of 119%.

(* We have adjusted the number based on the idea that an engaged viewer is worth more than a casual viewer—the adjustment is simply the total time of the engaged scenario divided by the total time where none of the viewers are directly engaged. You can use the spreadsheet to generate those numbers for you as well.)

This is a powerful new tool to demonstrate that not all sponsorships and advertising campaigns are created equal.

Prof Bruce

Postscript: here are the calculations for the above scenarios.

CPMt Calculator and ROI for Advertisers and Sponsors

CPM $15 per thousand views 1,000 views
Average View Time 250 milliseconds Typical Ad
Total View Time 250000 milliseconds 1,000 milliseconds/second
CPMt $ 6.00 per 100,000 milliseconds 100,000 milliseconds

CPM $15 per thousand views
Average View Time 250 milliseconds Typical Ad Conventional Views
Average View Time 30 seconds Engaged Direct Engagement
Number Engaged 1%
Number Typical Views 99%
Total View Time 247500 milliseconds Typical Ad Conventional Views
Total View Time 300000 milliseconds Engaged Direct Engagement
Grand Total 547500 milliseconds
CPMt $ 2.74 per 100,000 milliseconds

Investment $10,000
Total Number of Conventional Views 666,667 views
Total Number of Conventional Views (adjusted) 1,460,000 views
Increase in ROI for Sponsor 119.0%