• If John is setting up a new video campaign, which manual bidding strategy should he use?
  • Cost-per-click
  • Cost-per-thousand-viewable impressions
  • Cost-per-view
  • Cost-per-engagement

This is the correct answer:

  • Cost-per-view

Bidding by cost-per-view (CPV) is the default method for setting the amount that you will pay for your True View video ads (when they are created with AdWords). A CPV campaign involves bidding on video views and other video interactions (such as clicks on call-to-action overlays, cards, and companion banners), whichever comes first.

A cost-per-view (CPV) billing model is relatively new to Online Marketing, Social Media Marketing, and Video Marketing. A cost-per-view is based on the interaction between the user and the advertising media. Upon requesting an advertising medium on the platform of the publisher, a marketer pays for the visual contacts generated.

This principle must be distinguished from impression-based campaigns, since a user’s action, such as clicking Play, Skip, or Expand on a video ad, must be taken before an advertiser’s advertising budget is deducted. Thus, cost per view is similar to performance marketing models based on the Cost Per Action principle.

General information

During the IAB (Interactive Advertising Bureau) meeting, which is in charge of standardizing digital marketing in the US, TubeMogul and Google suggested the cost per view metric. As a result of video ads, platforms such as YouTube, Vimeo, and Facebook saw increased traffic and usage frequencies. According to a study by Comscore, the number of daily unique viewers increased by more than 30% in 2010.

TubeMogul and Google wanted to change the billing model because it did not continue to evolve despite user behavior and technology changes. As far as the performance of campaigns within the context of Video Advertising is concerned, there are no reliable metrics available. Typically, the most frequently used billing models were the CPI (Cost per Impression) and the CPM (Cost per Mile) derived from it. There is, however, the disadvantage that it is impossible to differentiate between videos that are actually requested by users and those that are not. Data from CPI and CPM are also included when no user interaction has taken place.

You aren’t aware of how many users clicked the video if you are billed based on CPMs. As a result, you end up paying users who didn’t click. Performance-based advertising faces this challenge. In addition, impressions are only counted, but the actual advertising effect is difficult to discern, preventing an effective cross-media comparison of different advertising possibilities. The data does not indicate whether or how long users watched a video. To make commercial media such as video ads scalable, CPV was introduced into the discussion in order to facilitate user interaction and engagement.

Calculating the CPV

Cost per view is usually determined by the publisher, however, it can be calculated like other metrics. It is common for publishers to charge between 0.10 and 1.00 Euro per video, which is calculated by the duration of the video. To determine whether the cost per view meets a campaign’s requirements, marketers should determine how much playback of advertising videos is worth to them. In order to calculate the CPV, divide the total advertising costs by the number of views.

How CPV works

It is the intention of the user that differentiates cost per view from other billing models. If users are willing to consume an advertisement, the level of acceptance will be high, and the risk of banner blindness will be low. The content generated by users is more likely to convey a brand’s message. However, they can be distinguished from other methods such as pre-roll and auto-inserts, especially when campaign performance is a primary concern.

Marketers and publishers value the CPV values because they provide a deeper insight into user engagement. As a result, the billing model becomes transparent and budgeting becomes easier. As a result, marketers only pay for the video ads that are initiated by the users. However, there are some limitations. CPV cannot assess aspects such as brand awareness and viral videos. CPV cannot evaluate the long-term effect of branding campaigns. In addition, a user can watch a viral video without being interested in a particular brand. With cost per view, it is difficult to scale formats that go beyond click-through user interaction.

Several factors determine whether marketers choose the CPV. Tests of the effectiveness of online advertising campaigns can only be done concerning pre-defined objectives. It may be more appropriate to use values such as CPI, CPM, or cost per hour as suggested by Financial Times.

Relationship with online marketing

For several years now, cost per view has been a key component of video content marketing. In the calculations, a certain amount of engagement is incorporated into the required user interaction. Marketing budgeting becomes more precise when advertising metrics can be captured and evaluated transparently. You can define your budget and immediately know how many clicks it represents. Cost-per-view billing is an option offered by companies like Google, YouTube, and Facebook. A model that is connected to Real-Time Bidding can also partially bid on CPV values. In addition to providing additional information and recommendations, publishers usually allow their customers to choose a specific model that matches the campaign goals.

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