Media Buying – Explaining Rate Base vs Impressions

by Michael Hubbard on February 22, 2011

in Media

Media buying in an interactive world is much different than in the traditional world – I think we all agree on that.  But every month, it never fails, right around invoicing time we have questions about what was purchased via an insertion order for an online placement versus what is invoiced and what actually got delivered.  These questions are great questions, especially if you’re only familiar with traditional rate bases or ratings and points.  So here is a quick stab at helping to explain the complexity behind media buying an actual number versus a base number:

1968 Western Electric Magazine Ad

1968 Magazine Ad

The internet does not have a “rate base” like a traditional print publication does.  So for example, if you buy an ad in the Wall Street Journal, they give you a circulation count of 2.1 million subscribers, but they also give you a rate base of say 1.7 million (I made that up).  What that rate base is is a guarantee that when you buy an ad from them that they will distribute it to that many people.  They are audited every year by ABC or BPA, and if they happen to miss that promised rate base, then they have to issue credits to their advertisers or some form of make goods (extra pages, discounts or whatever in the following year).

With the internet – there are no rate bases – rather on a CPM buy, you contract to buy a guaranteed number of times your banner ad will be displayed.  The only auditing that happens is when you use a 3rd party ad server and match it against the publishers ad serving software for comparison.  Our agency ad servers act as our ABC or BPA.  So when we contract 1 million impressions with a publication, we then audit it through the ad servers to ensure that we received the full amount.  Still with me?  Because here’s where I think people forget about the internet and how it’s used…

1 weird tip web ad

2010 Web Ad

Just because a publishers website gets 1 million impressions last month does not mean they’ll get that amount this month.  It’s web based, which means, it’s on-demand and there is no guarantee that in one month 1 million ads will EVER get viewed.  It could be a slow news month.  It could be that there was a major newsworthy event that attracted eyeballs elsewhere.  It could be that people just decided not to log on as much that month.  In other words – we have historical data that forecasts those 1 million ads should be available, but we have no guarantee that life doesn’t get in the way.  So with that – we audit the numbers at the end of the month, and if the publisher under delivers, we force them to deliver the balance in the next month.  So the insertion order that we place guarantees us that we’ll get 1 million impressions, but due to the publisher and worldly events as a whole, there’s never a guarantee when they all get delivered.

In short – we are talking about both of them getting delivered, it’s just that in the traditional world media is bought on an audited rate base that is guaranteed with each delivery, whereas online is bought with a guaranteed delivery, but no guarantee of what time frame to be delivered.

{ 2 comments… read them below or add one }

Ali March 6, 2014 at 11:36 am

Thank you very much,

and just because we’ve been viewed in a magazine or a site it doesn’t mean that we have encouraged the audience necessarily.

Reply

sirish May 1, 2014 at 7:47 am

Hello

My name is Sirish, Account Manager at Traffiq Exchange a CPM based adnetwork.
I’m looking out for traffic from US UK AU on cpm basis (web display banner),please let me know how can we take this further.

Looking forward to work with you.

Reply

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