Understanding the Costs of Digital Advertising

1. Size of the target group you want to reach: Specific vs. Broad Audience

One of the most influential factors in determining the cost of your digital advertising campaign is which target group you want to reach.

If you opt for a highly specific audience, such as a niche market or a particular demographic group, your CPM (Cost Per Thousand Impressions) will likely be higher. This is because websites charge a premium for advertising to more narrowly defined groups who are more likely to convert. However, the overall costs can remain low because you're targeting fewer people.

On the other hand, running a broad campaign with less precise targeting typically results in a lower CPM. Since you're casting a wider net, there’s less competition for impressions, and you don't need to advertise on highly specific websites that can command higher CPMs due to their specialized content. Even if the price you pay per 1000 impressions is lower, if you want to reach a wide audience this normally requires a higher budget.

Just think of the following scenarios: Compare the campaign of an online store for kite equipment that only wants to reach people in the USA who go kite boarding with that of a brand for razors that wants to appeal to all men.

Even if the CPM that the kite store must pay to deliver its ads specifically to kitesurfers is higher, the total budget that it has to invest will be lower than that of the shaving brand, as the sheer number of kitesurfers in the US is significantly lower than the total the number of men in the US. Even if, on the CPM level, the price to deliver one thousand impressions to men is lower for the shaving brand, the total budget of the campaign will need to be higher to make sure every man in the US is reached.

Another example is running a hyperlocal campaign in only one city, which will obviously cost less then targeting the whole country. You can learn more about regional and local advertising opportunities here.

2. Ad Formats and Their Impact on Cost

The ad format you choose plays a crucial role in determining the cost of your campaign. Different formats have different price points. For example, video advertising tends to be one of the most expensive formats in terms of CPM, especially when placed in conjunction with high-quality video content on premium platforms such as Netflix, Hulu or Disney+. Despite the high price in form of CPM, advertisers still invest in this format as they aim for ads on these premium channels to have a positive impact for their brand.

Other formats, such as display ads or digital audio, may be less expensive but also come with varying costs depending on where and how they are placed. For example, display advertising on premium websites or platforms that cater to specific topics often carries a higher CPM due to the website’s established value in a niche market.

To dive deeper into the specifics of each media type, we have dedicated pages on our website discussing the costs of Digital Audio, cost of Digital Video, cost of Digital Display, and cost of DOOH advertising. These pages provide more detailed insights into the costs for each ad format.

3. Minimum Spend Requirements

If working directly with the publisher or over its rep firm, some publishers require a minimum spend for campaigns to run. This can sometimes be a barrier for advertisers with smaller budgets or those looking for flexible spend options. However, this is not the case when booking through our AllMediaDesk platform. We allow you to run campaigns without being locked into minimum spend requirements, offering greater flexibility and control over your budget. This makes it easier to start campaigns with various budgets, from small-scale tests to larger, more extensive advertising efforts.