DOES AN INFLUENCER MARKETING CPM ACTUALLY CORRELATE WITH PERFORMANCE?
What if we told you that CPM isn’t the key metric that most brands think it is?
The reality is, as an influencer marketing agency, we often get requests to only present creator options with CPMs below a particular threshold.
The thinking is that the brand can keep costs down and results up if they simply limit their CPMs.
But as we’ll show you, we’ve become convinced that CPM is actually a very poor key metric if you’re trying to drive more sales.
Are we saying that it’s a worthless metric? No. But we think it needs to be used in the right way.
But what is an influencer marketing CPM?
Before we get started, it’s important to make sure we’re all on the same page.
What do we mean when we say CPM?
In this context, we’re talking about the cost per mille (the Latin word for thousand). In short, it means the cost per thousand views.
In many forms of paid media marketing, CPM is a common metric. And for many other uses, we think it can be a fine metric.
In fact, if you’re just going for total reach (the maximum number of eyeballs on your content) then CPM may be all you need.
But if you’re like many of the brands that talk to us about their CPM thresholds, you’re actually looking for a reliable metric that is an indicator of an ability to drive revenue.
You want to know what the best way is to predict sales.
You want to know if and when an influencer marketing CPM is helpful and when it could be problematic.
These are good questions and we’ll cover them next.
When is influencer marketing CPM a helpful metric?
You might think we’re saying that CPM is never useful, but we’re not.
There are two instances where we’ve found that CPM can be a very useful metric.
1. When you’re running out of solid performers
While not perfect, when you’re running out of solid performers and you’re looking to test new or unproven creators to add to your portfolio, turning to CPM can sometimes be the easiest place to start since it’s the simplest way to pay for a view.
2. When you’re only looking for maximum reach
As the term suggests, at its core, a CPM is a metric about reach. That means that if your goal is simply to get the greatest reach, trying to find the lowest CPM can work for you.
But if you’re like many of the brands we talk to, these aren’t often your goals.
When is an influencer marketing CPM not helpful?
An influencer’s CPM is rarely helpful when you’re trying to gauge direct-response or conversion performance (AKA sales).
Why do we say that? Well, we have the data.
We dug into historical performance data across our strongest and weakest-performing creators for the last two years and what we found was interesting.
Among our strongest performers, (defined by repeat bookings and our proprietary data), there was no correlation between CPM and performance.
There were roughly the same percentage of creators at the sub $50 level as there were at the $50-$100 level and $100+ levels.
After we tested the strongest performers, we were curious about what looking at the opposite might indicate.
And when we dug into our weakest performers (defined by one-time bookings and our proprietary data), again, there was no correlation between the CPM and performance.
So what is the best indicator that a creator will drive conversions?
We’ve expressed this before, but this data demonstrates it -- historical data on creator performance is most often the best indicator of success.
We see CPMs quickly become irrelevant when it comes to high performers.
In fact, we tried to look at the data from another angle by pulling data from our strongest-performing brand. A brand that has invested heavily in testing creators across all CPMs, and in turn, has the highest volume of strong performers in its portfolio.
Interestingly, when we looked at the data on these strong performers and which CPM bracket they fell into we saw a familiar breakdown.
So what does this mean?
In short, a high performer's CPM is most often tied more closely to their specific bandwidth and demand, not their performance.
And that means that if you’re selecting creators based purely on their CPM, you may be leaving significant opportunities for success on the table.
Now at this point, you may be asking, how does Outloud describe this mindset shift around influencer marketing CPM?
We’ve come to think of influencer marketing CPM like a hammer. It’s great for driving in nails (i.e. views/reach) but terrible for driving in screws (i.e. direct response performance).
Sometimes if you hit a screw hard enough with a hammer you may drive it in... but at the end of the day, it will always be the wrong tool for that particular job.