What is CPM (Cost Per Mille)

With the number of internet users growing and reaching 5 billion people worldwide in April 2022, the mobile market keeps expanding as well. The competition within the industry becomes more and more severe. It seems impossible for app publishers to succeed without paid ads in the current business climate. No wonder digital advertising networks are booming.

Running mindless ad campaigns became a thing of the past. Nowadays it’s imperative for app publishers and marketers to have a profound understanding of the message they deliver and the impact their advertising campaigns have. That’s when multiple metrics come into play helping to project app performance. Let’s have a closer look at one of them called cost per mille or simply CPM.

What is CPM in Marketing?

First things first, what does CPM mean? It’s both a marketing metric and pricing model that indicates the cost of 1000 ad impressions for a publisher. Cost per mille is also known as cost per thousand as the Latin word ‘mille’ can be translated as a thousand.

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. 

As with every metric regarding mobile marketing management, CPM rates can vary dramatically depending on the ad platform, time, and targeted geolocation.

CPM Meaning and Why It 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.