Cost Per Thousand (CPM)
Cost per thousand (CPM) is the price you pay to get one thousand views on an advertiser’s webpage.
What Is Cost Per Thousand (CPM)?
Cost per thousand (CPM) is the price you pay to get one thousand views on a publisher’s webpage. CPMs vary based on the advertising platform you choose. Social media channels may charge a different CPM compared to the amount you pay for one thousand ad impressions on a PPC platform. Cost per thousand is also referred to as cost per mile.
How Does CPM Work?
CPM takes impressions (the digital traffic or engagements) on a particular ad into account. Impressions are also known as ad views. Ad views represent the number of times an ad was shown on a site. Advertisers usually calculate CPM for campaigns that target a big audience, meaning thousands of people and higher.
To calculate the success of a CPM campaign, you’ll need to determine your click-through rate. The click-through rate (CTR) analyzes a visitor who clicked on an ad, tallying the number of users who watched and clicked it. That said, the success of an advertisement shouldn’t just be measured by CTR because the ads that users view but don’t click may still bring new traffic and generate brand awareness for your company.
How to Calculate CPM
You can measure CPM by dividing your total ad spending by the number of impressions/ad views and multiplying the result by 1,000.
The formula looks like this:
CPM: Total Campaign Spend / Number of Impressions x 1,000
How Does CPM Relate to Online Marketing?
Cost per thousand and digital marketing are related, as the latter has a wide reach. With CPM, it is easy to promote a company, its products, or services. CPM strategies help you introduce something new and generate awareness about it. The company advertising can get more brand recognition and attract new customers.
Another perspective is to look at the cost per thousand as an advanced quality advertising tool. It lays all the focus on displaying high-quality ads to a big audience and gives companies a higher chance to get their brand message across.