What Is CPM? Calculating Cost-per-Thousand Impressions

PPC PPC Basics

If you are involved in marketing or promotion in any way, knowing how to get your brand and products out there to a wide audience is an essential skill. However, you also need to make sure that you do not overstretch your budget. As such, learning the correct measurements and costs of advertisements is a must.

After reading this article, you will not only understand what CPM is but you will know how to keep track of it and utilize it for your business.

What Is Cost-per-Thousand Impressions (CPM)?

Cost-per-thousand impressions or CPM (also known as “cost per mille”) is the price an advertiser pays to a web platform for every thousand views, also called impressions, that they get on their web page.

For instance, the average display ad CPM is around $2.00. This CPM indicates that you pay $2.00 for every 1,000 views your advertisement received.

Who Should Use CPM?

CPM is used in the marketing and advertising field, and it is the most frequent pricing metric used in digital marketing and online advertisements.

It does not aim to target a specific audience but is useful for campaigns trying to reach the broadest possible audience.

Why Is CPM Important?

CPM is important because if you are going to get your advertising campaign off the ground, you must raise widespread awareness among potential consumers. To do this, you need to determine what kind of advertisement reaches the most people.

For instance, if you have ads on two different websites, and the CPM on Website A is lower than on Website B, you have determined that Website A is the more cost-effective place to advertise. You have paid less to reach more people.

How Do I Calculate CPM?

There are simple formulas to use when calculating CPM-related costs for your campaign. You can calculate CPM using the following formula: the total cost of the campaign divided by the total number of impressions divided by 1,000 equals your CPM.

CPM (Cost-per-thousand impressions) is the price you pay for exposing your ads. Learn how to keep track of it and utilize it for your business.

What Is a Good CPM?

What constitutes a good CPM depends on your campaign goals and whether you have reached the minimum number of consumers you intended to reach.

In addition, you need to make sure that you are reaching an audience that will later engage with your content: a low CPM means little if it doesn’t lead to profit in the future.

Should CPM Be High or Low?

While the success of CPM in your advertising campaign is subjective, a good rule of thumb is to keep your CPM low. The lower your CPM, the less you pay to reach a broader audience.

This way, you are not wasting too much of your advertising budget early in the campaign. You have a better idea of what audience and ad platform you should be focusing your attention on in the later stages of your campaign.

What Can Damage My CPM?

Some factors that might be interfering with your CPM are:

The platforms you choose to advertise on – if they are not suitable for all audiences, then you will get a narrower audience and fewer impressions.
Your geographical location – specifically, if you are trying to advertise to a consumer group through a language barrier.
Seasonal popularity of your brand or products waning at the wrong points of the year
Platforms that use bot traffic to artificially increase their engagement

How Do I optimize My CPM?

The best way to make the most of your budget is to pay close attention to all factors of your data to determine what performs best where and which specific audiences to target.

Others include making your ads easily viewable on both mobile and desktop devices, keeping ad density low so as not to annoy viewers, and experimenting with different ad formats.

What You Should Know

Cost-per-thousand impressions (CPM, “cost per mille”) are essential metrics used in advertising and marketing. It is the cost an advertiser pays a web platform for every one thousand views, also known as impressions, that they get on their web page.

One important thing about CPM is that it only calculates the number of people that have seen your ad, not how many have clicked and followed it. For that kind of data, you would have to look at measurements like CTR (click-through rate) or CPC (cost per click).

In addition, keep in mind that CPM is an imperfect metric and does not account for factors like ads failing to load, which skew the view count.

To learn more about marketing metrics, keep searching through Adcore’s helpful and informational articles.

Get exclusive CMO tips that I only share with email subscribers.

Don't forget to share this article!