CPM is an online ad pricing model. CPM stands for Cost per Mille and it’s also known as CPT, Cost per Thousand impressions. Besides CPM, there are other common digital advertising models:
- CPA: Cost per action
- CPC: Cost per click
If CPM is chosen as a payment option, the advertiser will pay each time the ad is displayed, whether it was clicked or not. This is known as an impression. An impression is any time an ad receives a view.
CPM Definition
In simple terms, cost per mile refers to the amount of money a company spends on advertising for every thousand potential customers reached. It is a key metric used in evaluating the effectiveness of marketing campaigns. With an understanding of cost per mile, businesses can make informed decisions on their advertising strategies and optimize their marketing budget.
CPM pricing model, cost per thousand impressions, means that the advertiser pays each time an ad is displayed. For example, if CPM is $20, the advertiser will pay $20 per one thousand times the ad is viewed, that is, every time the ad receives one thousand impressions.
How Does CPM Work?
CPM values how many times online ads are viewed.
This model is mainly used when the objective is to get a massive reach, for example in branding campaigns. This online payment option for your ads is profitable for those brands that are looking to reinforce their presence in the digital world and put themselves on the map.
How to interpret CPM?
How do you know if your CPM is a good one? CPMs are much more about quality than quantity, meaning you want to create an ideal budget that will turn the most impressions into conversions.
On average, a good CPM rate for ad banners can range anywhere from$2 to $10 or more.
How is CPMCalculated?
Let’s see an example:
- The total cost of an ad campaign is $20,000.
- The total audience is 2 million people.
To calculate your CPM, you divide the total cost of the campaign by the number of impressions. The number you get is then multiplied by 1,000, which will then generate the CPM figure, also known as the CPM rate.
CPM is the most popular model for branding awareness campaigns. However, CPM bidding is not advisable to use when the strategy is focused on increasing conversions.
On web portals, the average CPM varies between $5-50. However, it depends on how it is segmented, etc.
CPM Examples
To better understand marketing CPM, we have created a list of some successful examples of cost-per-mile.
Targeted Advertisem*nts
Targeted advertisem*nts are a key component of CPM marketing. By tailoring your ads to a specific audience, you can ensure that your message is reaching the right audience, resulting in a higher CPM. For example, a new apartment complex near the university targets its ads toward college students and parents in the area. This strategy is a great way to increase their CPM.
Influencer Marketing
Another effective CPM marketing tactic is utilizing influencer partnerships. By collaborating with influencers who have a loyal following in your target market, you can tap into their audience and increase your brand’s exposure. For instance, a beauty brand partnering with a popular beauty blogger can significantly boost its CPM as the blogger’s followers are more likely to listen and purchase the brand’s products.
Email Marketing
Another example is through email marketing. By sending promotional emails to a targeted list, businesses can showcase their products or services to a niche audience straight to their inbox. CPM marketing through email can be a cost-effective method for reaching interested consumers with the ability to track open rates and click-through rates!
How Do CPM Campaigns Compare?
Many wonder how campaigns using CPM compare to campaigns that do not. Generally speaking, CPM campaigns often cost less. Users who run CPM campaigns can get more impressions on their posts for less money. The only important thing to note is the difficulty of categorizing what an impression is. It is often whenever the ad is viewed which makes it hard to measure if someone does anything after viewing the ad.
Digital Marketing Definitions
Now that you know the meaning of CPM or cost per thousand impressions, tell us your thoughts about this online advertising model and if you have already tried it.
Isabel Romero, 10 January 2024
