Cost Per Mille (CPM), also known as cost per thousand, is a marketing term used to denote the price of 1,000 advertisement impressions on one webpage. If a website publisher charges $2.00 CPM, that means an advertiser must pay $2.00 for every 1,000 impressions of its ad. The “M” in CPM represents the Roman numeral for 1,000.
Why is CPM Important?
CPM is a crucial metric in the advertising industry as it signifies the cost-effectiveness of a marketing campaign. It allows advertisers to compare the cost of advertising on different platforms, regardless of the audience size, and helps in budgeting and strategy planning. For publishers, it’s a standard way to price ad inventory.
How to Calculate CPM?
The CPM formula consists of the total campaign spend, divided by the number of user impressions. Then the result must be multiplied by 1000. Thus, the cost per mille model presupposes that app marketers pay a set price which depends on the number of monthly or quarterly impressions an advertising placement receives.
CPM = (Total Ad Spend / Total Impressions) × 1,000
As with every metric regarding mobile marketing management, CPM rates can vary dramatically depending on the ad platform, time, and targeted geolocation.
Why CPM is Important?
This metric appeared as part of the programmatic advertising ecosystem that allows app marketers to buy and sell digital ad inventory. Nowadays, the cost per mille model is mostly used for campaigns targeted at improving brand awareness as it’s based on impressions and its formula doesn’t take into consideration installs, subscriptions, or other types of user engagement.
Comparing CPM to Other Ad Metrics
Now, let’s examine the cost per mille differences compared to other popular advertising metrics and pricing models.
CPM and eCPM
eCPM is the abbreviation of the metric called effective cost per mille. It’s the metric that answers what is the cumulative revenue an app publisher earns for every 1000 impressions. Compared to cost per mill, eCPM entails more dynamic calculations.
While CPM is used as a statement metric to estimate the cost of an ad campaign and its expected reach within the budget of an app marketer, eCPM helps publishers to evaluate ad monetization and revenue generated by a specific ad campaign.
CPM and CPC
As it was mentioned above, cost per mille is more useful for raising brand awareness rather than boosting conversions. On the other hand, the cost per click model is what you need if the conversion rate is the primary concern of your ad campaign. Even when campaigns based on the CPC method don’t get that many clicks, impressions CPM concentrates on come for free.
CPM and CPA
The very name and definition of the ‘cost per action’ term indicate that app publishers pay only for target actions like purchase or registration within this model. When CPA centers around increasing the number of users who engage with an app on the deepest level, impressions are the only thing CPM can guarantee.
Optimization of CPM Campaigns
The optimization process should start with choosing the optimal ad networks that leverage CPM strategies (for example, Facebook or Google AdSense). Integrating the CPM model into your strategy, try to focus on monitoring not only the cost of each 1000 impressions but also your ad inventory as well.
Don’t forget seasonality. Don’t miss calendar slots when users buy big and schedule ad campaigns tailor-made for each seasonal occasion be it Christmas, Valentine’s Day, or Black Friday. And above all, never stop experimenting with ad formats and placements, that’s the only way to prevent stagnation of your viewability.
What Influences CPM?
CPM is influenced by factors such as the target audience’s demographics, the ad’s relevance and quality, the platform used for advertising, and seasonal trends or special events.
How to Increase CPM?
To increase CPM, focus on creating high-quality, engaging ads targeted at the right audience, optimize ad placement for maximum visibility, and experiment with different advertising platforms to find the most effective one.
What Factors Can Reduce CPM?
CPM can be reduced by poor ad relevance or quality, an oversaturation of ads on a page leading to ad blindness, low-quality or non-engaged traffic, and broader economic downturns affecting advertising budgets.