Why CPM Ads just pay pennies ?

There are many modes in which ad serving companies pays publishers - PPS , PPC and CPM.

Though to many publishers, these payment modes may sound completely independent to each other but they are not. They work in a hierarchy, with Affiliate program at the top and CPM at the bottom and this is the reason CPM program only pay pennies.
Before I explain What i Said above, we should first understand the concept of advertisement. Advertisement has a value only if it results in some sort of sale. So in nutshell impression has a value if it converts to Click and Click has a value if it converts to Sale.

Why CPM Ad networks pays pennies ? The simple answer is the commissions and costs; CPM networks pays to be in the business.

Ad affiliates program are generally run directly by sellers like Amazon so they are ready to shell good percentage commission to the referrer. You take the risk by getting into such programs and hence the rule of business applies here. Though one may get revenue in pulses upon sale, the reward will still be higher if you opt a focused strategy. 

The other way is to throw that risk onto Ad networks in lieu of certain commissions. PPC ad networks are mostly Search Engines as they can add value by focusing advertisements. But a small publisher may not even end up getting much clicks, so they add another business in the hierarchy - CPM networks.

Served CPM networks are the lower third in hierarchy. They tie up with search providers to help them in focusing the ads. So in end , Whatever the seller pays as a referal, it goes to three parties.

1. Search Engines / PPC networks,
2. CPM networks,
3. and Publishers. 

CPM networks are good only if you are a small publisher. As you move up in terms of site popularity and hits , better switch to PPC and then Affiliates.