Introducing Global Pricing
By: Eric Berry
Tags: Pricing Strategy, Advertising, Funding, Open Source

Introducing Global Pricing

CodeFund now supports country-specific eCPM pricing

CodeFund’s mission has always been to help grow and sustain open source by providing a passive, recurring, consistent revenue stream to maintainers, projects, and bloggers that create value for the developer community.

To understand our most recent changes, it’s important to recognize the path that led us here.

CPC (July 2017)

CPC or Cost per Click is a revenue model where the advertising budget is only spent when someone clicks on the ad. When we launched over 18 months ago, we started with a CPC model of $1 = 1 click. It was simple and worked well for almost a year.

Pros:

Traffic source (location) didn’t matter as much

Advertisers only paid for clicks

It was straightforward to understand (by publishers and advertisers)

Cons:

It opened the door for fraudulent publishers (unfortunately there were quite a few)

Publishers were paid based on ad performance (which was out of their control)

Advertisers were incentivized to display poor performing ads (which resulted in longer lasting ad spend… with the same results)

Advertisers were frustrated that they couldn’t estimate the number of impressions they would receive based on their budget

Advertiser’s internal analytics data didn’t match our click data

As we grew, advertisers discovered that there were discrepancies between their back office click analytics and our click data.

eCPM (June 2018)

In May of 2018, we switched our pricing model to one that is more widely accepted within the marketing world: eCPM.

eCPM stands for ‘Effective Cost per Mille (or 1000 impressions). For every 1,000 ad impressions, we charge X amount of dollars. We even break this down to fractions of a cent on each individual impression.

For example, if an ad campaign is set at $4 eCPM, each impression is marked with a cost of $0.004.

Pros:

Advertisers can manage advertising spend better by guaranteed traffic

Fraud has decreased dramatically

Advertisers are incentivized to provide well-performing ad creatives that show market fit

Publishers are paid on actual traffic instead of ad performance

Cons:

Fixed eCPM pricing meant that advertisers needed to be very selective with the countries they were targeting

Our ability to help fund developers in countries such as India, China, and Brazil was moderate at best

Let’s take a look at our daily traffic on the platform overall.

You can see that we have a pretty healthy amount of global traffic coming in. Countries to note here are India, Brazil, China, and Russia. Combined, they provide over 22% of all CodeFund traffic.

Now, let’s take a look at our ad spend over the past 7 days.

Notice that the US accounts for almost 40% of the total ad spend on CodeFund. What’s more interesting is that the countries mentioned before (CN, IN, RU and BR) are mostly not seeing paid ads.

Why?

Return on Ad Spend (ROAS)

Return on ad spend (ROAS) is a calculated metric where the advertiser takes the total revenue generated for a specific marketing channel (like CodeFund) and divides that amount by the total spend for that channel.

For example, let’s say an advertiser wants to spend $5,000 on advertising for one month with CodeFund. Over the next 3 months, they determine that the traffic generated from CodeFund Ads provided signups equaling $8,000 in lifetime value. Their ROAS would be 1.6.

Keeping ROAS above 1.0 is essential. Any less than that and there’s a chance your campaign might not be providing enough value to continue.

By targeting countries that tend to provide higher returns, advertisers are attempting to keep their ROAS as high as possible.

Unfortunately, limiting ads to countries with higher perceived lifetime value is excluding a large pool of developers, maintainers, and bloggers who are trying to build the open source ecosystem in their part of the world.

So… we decided to do something about this.

Global eCPM (February 2019)

Starting this week, all new advertising campaigns will be using our Global eCPM Pricing model. It’s very similar to the eCPM model that we’ve been using for the past year, but with one crucial difference.

Geo-based pricing will allow single campaigns to target globally by applying country-level price modifiers

We apply a multiplier to each country based on market research and feedback from our advertisers. These multipliers were inspired by data from WordStream.com.

The eCPM for a country is determined with the following algorithm:

Here’s an example of the multipliers (based on the charts above) using the BASE of $3.50.

You can view all country multipliers in our code.

What does this mean for advertisers and publishers?

Before launching, we ran a comparison for one of our advertisers to see what the price difference would have been given their ad spend in January. Based on the comparison, their campaigns would have cost approximately 13% less using the new pricing model.

Our goal with global pricing is to enable advertisers to not spend less but target more countries with a much better ROAS

By opening up the doors to better pricing globally, we can now provide a better ROAS to advertisers, which of course leads to happier, long-term customers.

Our publishers will also benefit from these changes. Let’s take a look at Remy Sharp for example. He’s the creator and maintainer of jsbin.com.

Here you can see his overall traffic to jsbin.com. Note that India, China, Russia, and Brazil make up almost 25% of his overall traffic.

With geo-based pricing, we are now able to help Remy fund his projects better by enabling advertisers to target these areas without the risks that existed before.

Join CodeFund

CodeFund Ads is an ethical advertising platform. Our goal is to fund the growth of the open source economy by funding software makers of all types: Maintainers, bloggers, and builders. We do this through unobtrusive non-tracking ethical ads.

No tracking visitors or placing cookies

No 3rd party scripts (such as Google’s DoubleClick)

Only relevant ads based on the context of the website, not the visitor.

If you are a publisher, we can help you generate funding. If you have a product or service that developers pay for, we can help you market your product.

Go to https://codefund.app to learn more.