To Achieve Ad Industry Sustainability, We Must Rethink CPMs and Outcome Metrics

By Phil Cowdell, Chief Strategy Officer at Channel Factory

Each year, Earth Day offers a reminder to sustainability-minded brands that their commitment to reducing carbon emissions and their overall environmental impact matters deeply. At the same time, it should serve as a reminder to the broader digital ecosystem that reducing waste within our core operations and standard practices is meaningful not only for brands’ bottom lines but also for the future of our shared society.

Across industries, waste is a problem—and the digital advertising industry is no exception. Powering the online advertising ecosystem requires a vast amount of energy. Every impression has a budget cost and a carbon cost, and wasted ad impressions drive those costs far higher than necessary. By implementing a more intentional approach to how we plan, execute, evaluate, and optimize online campaigns, our industry can move the needle on environmental sustainability in a real way.

Eliminating Waste with a New Lens on CPMs

At present, the standard industry playbook urges brands and agencies to pursue the trifecta of reach, scale, and cheap CPMs. However, this approach delivers misleading results—superficial rather than ROI-based KPIs that conceal misspent budgets and tremendous waste.

The current system pays lip service to campaign performance, but it tolerates wasteful campaigns that place ads within content and audiences that are unsuitable. That includes irrelevant content, content that attracts viewers who are not viable consumers (like children), and consumers who are unlikely to engage. Brands’ budgets are wasted, and in the process, needless carbon emissions contribute to the growing detrimental impact of our industry on the environment.

Consider a campaign for an upmarket, all-natural dog food. The broadest campaign might return a $10 CPM, but because only 66 percent of households have a pet and only 40 percent have a dog, it is likely that many of those impressions might be wasted. If wasted impressions were accounted for, the advertiser would discover they’d paid for some pricey kibble ads—from both a budgetary and sustainability standpoint.

The industry can improve these outcomes by shifting its focus from low costs to true value and efficiency. Targeted CPMs sometimes appear to cost more, but that might be because they measure impressions served within suitable, inclusive content that draws a relevant audience. As a result, they are more effective when measured against both business outcomes and waste reduction.

If the aforementioned dog food campaign were to prioritize value over cheap CPMs, the brand would start with relevant IAB and GARM topical categories, like “pets,” that at least deliver consumers interested animals. Then, the advertisers would drill down further using keywords like “dog care” or “dog health,” as well as vetted channels like DogumentaryTV or “dog whisperer” Cesar Millan.

By challenging the industry’s misguided math by trading bargain-barrel CPMs for value-centric CPMs, our industry can make meaningful progress in waste reduction. We can then take it a step further with improved measurement and optimization.

Going From Input to Output to Outcome

When reporting on campaign performance, input metrics like CPMs, impressions, and reach are the industry’s shorthand for success. But evaluations that start and end there give little insight into the quality of an ad buy, and don’t encourage advertisers to reduce campaign waste. To get a better picture of performance and the data needed to support sustainable ad buys, we must go a step further and examine output and outcome metrics, too.

Output metrics such as attention, time spent, and actions taken provide a clearer picture of engagement and impact. Attention and time spent gauge genuine interest and immersion, while actions taken—clicks, shares, conversions—signal active engagement and intent. These metrics offer a more meaningful assessment of campaign effectiveness and efficiency.

Finally, outcome metrics hold the key to unlocking tangible ROI. Cost per visit, cost per lead, cost per acquisition—these metrics bridge the gap between investment and return. They provide a direct link to campaign effectiveness, offering invaluable insights into conversion rates and bottom-line impact. They also play an essential role in helping advertisers reduce waste within their digital ad buys because these results improve when ads find the right audience

It’s time to look beyond the surface and uncover the true value of digital advertising campaigns by prioritizing value-rich CPMs and outcome metrics. In doing so, advertisers can dramatically reduce waste, not only from a budget standpoint but also from an environmental one. It’s the win-win scenario our industry needs to embrace—not only on Earth Day, but every day.