Frequency Capping: Why Every Ad Server Should Implement It

Frequency capping, also known as impression or ad capping, is an ad targeting option that limits how many times a user sees a particular ad or advertiser in a given time frame.

As you build your own ad platform, undoubtedly this feature will come up - either internally or as a request from an advertiser. The question is - should you spend months researching and building this functionality?

This article explores why you should incorporate frequency capping into your ad server and the various benefits of doing so.

So, what is frequency capping?

Frequency capping is an ad targeting option that limits how many times a user sees a particular ad or advertiser in a given time frame.

Generally ad capping involves three components:

1. # of times to show the ad before capping it (once, ten times, etc)
2. The hierarchy of what should be capped (a specific creative, a campaign, the advertiser entirely)
3. The timeframe it resets by (hour, day, week, month)

For instance:

• “Limit users from seeing any Nike ad more than two times per week”
• “Limit users from seeing a specific Nike ad more than once a day”

What are the benefits of frequency capping?

There are three main benefits of implementing ad capping into your product:

1. Advertisers like having the ability to set and change caps
2. Building it into your delivery logic could drive more revenue
3. It helps ensure that users aren’t bombarded and annoyed by ads they don’t like

From this standpoint, impression capping could be one of the most impactful features you build, as it accomplishes three things at once: driving more revenue while keeping both users and advertisers happy.

Should I expect advertisers to demand frequency cap functionality?

Your ad server will likely be competing with Google, Facebook, Amazon, etc for budget. It’s important, therefore, to have as much feature parity with them as you can.

Is frequency capping one of those must-have features?

The answer isn’t a clear yes. Below looks at the major ad buying platforms and whether they allow advertisers to manually manipulate impression capping rules.

Platform	Do they offer?
Google Ads	Yes
Pinterest	Yes
Snapchat	Yes
Facebook	Yes
DSPs/Exchanges	Most
LinkedIn	No
Twitter	No
Quora	No
Microsoft Ads	No
Reddit	No
Amazon Sponsored Products	No
eBay Promoted Listings	No
Etsy Promoted Listings	No

As you can see, it’s a mixed bag, with the two largest players offering it (Facebook/Google), but the others divided. From this standpoint, we would not consider it a tablestakes feature. That said, do note that brand-conscious advertisers with larger budgets may see this as a non-starter.

Should I build frequency capping rules into my ad delivery logic?

Maybe more important than feature parity is the question of whether your decision engine should employ ad capping by default. This would involve caps built into the logic, with or without an ability for the advertiser to adjust them.

The goal of doing so is to drive more revenue and improve the ad experience. For example, impression caps help ensure you don’t show ads to users who are unlikely to engage. If User 123 didn’t click on Ad 456 the first six times she saw it, why show her it a seventh time?

You wouldn’t be the first engineering team to do this. LinkedIn Ads have fixed frequency caps, with their docs saying, “Because LinkedIn is very focused on member experience, frequency caps are strictly enforced. This means that if an ad was already served to a particular member he or she will not see it again for 48 hours.”

Twitter too incorporates impression capping by default into their logic, but they only state they do it, not the exact rules they have in place.

Do you have data to show how caps help revenue?

Yup! For this article we ran a month-long campaign on Google Ads. We limited targeting to one country, one site, one ad unit, and an intent audience around ‘ad serving’. We then built four campaigns with the same Kevel ad, the only difference being what frequency caps they had.

We made sure to give the stricter-cap campaigns higher CPM bids - ensuring, for example, the campaign that was limited to one ad per week always won when eligible.

The results are not too surprising, with performance (as measured by click-through-rate and cost-per-click) degrading with looser frequency caps.

Campaign	Caps	Impressions	Clicks	CTR
#1	1 per week per user	339,400	560	0.16%
#2	3/week (4 total)	213,900	280	0.13%
#3	6/week (10 total)	122,200	65	0.05%
#4	Unlimited	215,400	50	0.02%
Total		890,800	955	0.11%

Users who saw the ad only once per week clicked on it 0.16% of the time - but the cohort that saw it more than 10 times clicked on it just 0.02% of the time (an 87% drop). Since I was buying on CPM, my cost-per-click was about 6x higher for the fourth campaign versus the first!

While these results are not universally applicable, they do highlight how the number of times a user sees an ad can have a meaningful impact on click-through-rates.

I’m now going to use these figures to extrapolate how frequency caps could drive more revenue for you, depending on how you charge (using the two most common pricing methods).

CPM Pricing

Let’s say you sell ads based on CPM, where advertisers pay a set amount for every 1,000 impressions. I come to you looking to run a month-long Kevel test, and we negotiate a $5 CPM. At the end of the month, I see these results (the below imps, clicks, and click-through-rate come from the actual Google campaigns):

Impressions	Clicks	Fixed CPM	My Cost (Your Revenue)	Effective CPC
890,800	955	$5.00	$4,454	$4.66

Perhaps I’m fine with $4.66 CPCs - but potentially my boss has demanded we only work with ad sources that drive $4.00 CPCs or lower. If that’s the case, I would not re-up spend with you; if this were a pervasive problem across advertisers, you may have trouble scaling your ad platform.

But what if your ad logic by default incorporated a cap of four ads per week per user? How would that have impacted performance? Here would have been the results for just the first two campaigns:

Impressions	Clicks	Fixed CPM	My Cost (Your Revenue)	Effective CPC
553,300	840	$5.00	$2,766	$3.29

Here, I would have seen 12% fewer clicks, but a CPC decrease of 30% ($4.66 to $3.29). That’s the type of performance difference-maker that could keep your advertisers happy and spending with you.

You would in this scenario make less from me in the short-term, but presumably you’d have additional advertisers to fill those impressions.

To be clear, this logic would be built into the platform by default, not a feature you would let advertisers toggle (such as what LinkedIn and Twitter do).

CPC Pricing

Here, you are charging advertisers by a set CPC. In this case, you don’t have to worry about the advertiser seeing variable CPCs and becoming unhappy (they will bid the price they want). Instead, you have to worry that you are leaving money on the table by showing ads to users who don’t click (aka, if you charge by CPC, any ad that doesn’t get clicked on is lost revenue).

Like above, let’s say I run a test with you at $4.00 CPCs. With no frequency caps, I would have seen:

Impressions	Clicks	Fixed CPC	My Cost (Your Revenue)	Effective CPM
890,800	955	$4.00	$3,820	$4.28

I’m happy because I saw my ideal CPC. But the question is, did you maximize your revenue?

Let’s look at what would have happened if you frequency capped at four ads per week:

Impressions	Clicks	Fixed CPC	My Cost (Your Revenue)	Effective CPM
553,300	840	$4.00	$3,360	$6.07

Here, you would have made about 90% the revenue on just 60% of the impressions. And that remaining 337K impressions could have been allocated to someone with a higher CTR, such as:

Advertiser	Impressions	Clicks	CPC	Your Revenue
Kevel	553,300	840 (0.15% CTR)	$4.00	$3,3,60
Advertiser #2	337,500	512 (0.15%)	$4.00	$2,049
Total	890,800	1,352		$5,409

In this scenario, if frequency capping were enabled, that 890K impressions would have netted you $5,409 vs $3,820 - an increase of 42%.

Of course, I’m using hypotheticals and data from one test, which makes it easy to reach the conclusion I want. This article isn’t meant to say implementing frequency capping means you’ll drive 40% more revenue; it’s more to plant a seed that this feature is one worth looking into.

What are frequency capping best practices?

There is no magic answer here. In our Google Ads test, I arbitrarily chose the four breakdowns. Maybe the results would have been starker if I had capped the second campaign at two impressions per user instead of three.

Moreover, no ad capping analysis will hold true across the board, even on the same site or app. For instance, a full-page mobile takeover may see a huge CTR drop-off after just one impression, but a small native ad may take five impressions to reach that threshold.

For this reason impression capping is all about testing. Each site, zone, geo, ad size, etc may be different - but if you can nail the right caps, your Chief Revenue Officer, advertisers, and users will thank you for it.