Partner Voices: A New Metric for Evaluating Your Email Strategy: “Revenue Per Open”
By Kerel Cooper, VP of Platform Development at LiveIntent
Efficiently increasing revenue from your email inventory is always top of mind for publishers. Cost Per Thousand Impressions (CPM), unique user value, yield, and number of subscribers are all important metrics when evaluating the value of your inventory.
But do any of these metrics tell the entire revenue story?
Defining the full value of email inventory is no easy task. There are so many factors and metrics to consider: frequency of send, opens, subscribers, ad units, ad positioning, sell rate, and more. Capturing all of these items in a single formula, when a lot of these factors and metrics come from multiple platforms and are managed by multiple people/groups within an organization, can create challenges when trying accurately evaluate revenue at a macro level.
Fully understanding the value of an email open requires a more comprehensive measurement – and that’s where the idea of Revenue Per Open (RPO) can help.
In this blog series we will explore the power of RPO. What it is, how to calculate it, and ways to increase revenue per email open.
What is RPO?
RPO is Revenue Per Thousand Opens.
It is a metric used to understand the value of the ad units in your newsletter template. While RPO may seem like a new, different metric, it is really just a way of condensing two familiar measurements: Cost Per Thousand Impressions (CPM) and Ad Tags Per Open, which we refer to as LiveTags Per Open (LPO).
How is RPO calculated?
RPO = CPM x LPO
If your current CPM is $1.25 and the LPO is 4 the RPO is $5.
$1.25 (CPM) x 4 (LPO) = $5 (RPO)
Why is RPO Important?
RPO gets you in the mindframe of thinking about the email open and monetization holistically instead of looking at each individual part at a micro level.
While CPM is very important, it creates a very micro view of the revenue by isolating each revenue generating piece and can be a misleading and limiting metric of success. By only looking at individual CPMs, you could fall into a trap of overlooking all the other items that impact revenue but fall outside the realm of CPM, like email sends, number of ad units, positioning of ad units, direct sold, and programmatic strategy.
For instance, a publisher might be very happy with the high CPM they are seeing from one ad unit in an email that sends once a week, but is missing an opportunity to increase overall revenue by adding another ad unit and sending twice a week for fear of decreasing the value of that individual unit.
RPO forces us to take a step back, look at all pieces of the template as well as the strategy behind the content, truly valuing the total amount of revenue gained when a subscriber opens a newsletter.
Getting Started with RPO:
Driving an effective RPO requires a shift in the mindset of monetization. You need to look at a number of the different facets we’ve mentioned and involve multiple stakeholders and strategies within each organization. In future blog posts, we will dive deeper into a number of these strategies, but for now, here are a few high-level strategies that can easily be implemented to drive more revenue immediately:
- Number of Ad Units
This one is pretty straightforward. The more ad units in the template, the more revenue that can be made. Keep in mind that we want to be able to strike the right balance between ad units and content. Utilizing an additional 300×250, 728×90, 160×600 or Marquee unit will help boost RPO.
- Positioning of Ad Units
There is no silver bullet here but as a best practice LiveIntent recommends positioning ad units in the top half or embedded within the content, especially on mobile devices. It’s important that the positioning of ads in the email template is regularly reviewed and evaluated. Performing A/B testing on positioning of ads can be a very productive exercise. Data shows that even below the fold placements within email perform well, as long as they’re embedded within the content and flows with the template.
- Opening up unsold inventory to auction-based buying
A great way to monetize your unsold inventory is to open up traffic to Demand Side Platform (DSP) demand. Opening up inventory to additional demand sources will allow additional buyers to learn about and bid on your inventory, thus creating additional demand and competition, which will drive up CPM and ultimately positively impact RPO.
- Direct Sold Efforts
No one knows a publisher’s inventory better than a publisher. Typically direct sales will execute buys at higher CPM’s. The more direct sales the higher revenue. Also, having direct sales compete with exchange and DSP buying again creates more demand and competition, which will drive up RPO.
Be on the lookout for future posts where we will dive deeper into all the different strategies and tactics you can implement to increase RPO.
For a free evaluation of your inventory and strategy session with one of our RPO experts here at LiveIntent, fill out the form on our Contact Us page.