CPM, or cost per thousand impressions, is a commonly used metric in digital marketing that refers to the cost an advertiser pays for every 1,000 times an ad is shown to a user.
CPM in digital marketing is used primarily for display advertising, such as banner ads or video ads. Advertisers typically bid on ad inventory based on CPM, which means they are paying for every thousand impressions their ad receives.
CPM is often used to compare the cost of advertising across different platforms or ad formats. For example, an advertiser might compare the CPM of Facebook ads to the CPM of Google Ads to determine which platform is more cost-effective.
However, CPM doesn’t take into account other important metrics like click-through rates, conversions, or ROI, so it’s important to also consider these metrics when evaluating the overall effectiveness of a digital marketing campaign.
What are the Types of CPM
Standard CPM: This is the most common type of CPM, where an advertiser pays a specific amount for every thousand impressions their ad receives.
Viewable CPM (vCPM): With this type of CPM, an advertiser only pays for impressions that are actually viewable by users. An impression is considered viewable if at least 50% of the ad’s pixels are in view for at least one second.
Cost-per-Completed View (CPCV): This type of CPM is used for video advertising, where an advertiser pays for every completed view of their video ad.
Effective CPM (eCPM): eCPM is a metric that calculates the effective cost per thousand impressions by taking into account other performance metrics such as click-through rates, conversions, and revenue generated by the ad.
Programmatic Guaranteed CPM: This type of CPM is used in programmatic advertising, where advertisers can buy a fixed number of impressions at a guaranteed CPM rate.
It’s important for advertisers to understand the different types of CPM and choose the type that best fits their campaign goals and objectives.
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What are Some of the CPM Benefits?
There are several benefits to using CPM as a metric for digital advertising campaigns:
Predictable Costs: CPM offers advertisers predictable and consistent costs for their ad campaigns, allowing them to plan and budget more effectively.
Wide Reach: CPM allows advertisers to reach a large audience, as they are paying for every thousand impressions, regardless of whether or not a user clicks on the ad.
Brand Awareness: CPM is particularly useful for building brand awareness, as advertisers can target their ads to specific audiences and ensure their brand is being seen by a large number of potential customers.
Easy to Measure: CPM is a straightforward metric to measure and track, making it easy for advertisers to evaluate the effectiveness of their ad campaigns.
Efficient Use of Budget: CPM allows advertisers to control their spending and ensure they are getting the most value for their budget by targeting the right audience and optimizing their ad placement.
Overall, CPM provides a reliable and cost-effective way for advertisers to promote their brand and products to a large audience, while also providing measurable results.
How to Calculate CPM in Digital Marketing
To calculate CPM (Cost per Thousand Impressions) in digital marketing, you need to know two variables: the total cost of the advertising campaign and the total number of impressions generated by the ad.
CPM formula in digital marketing = (Total cost of the advertising campaign / Total number of impressions) x 1000
To break down the formula:
Total Cost of the Advertising Campaign: This is the total amount of money spent on the advertising campaign, including creative development, ad placement, and other related costs.
Total Number of Impressions: This is the total number of times the ad was displayed to users, regardless of whether or not they interacted with the ad.
It’s important to note that CPM is a metric used primarily for display advertising and may not be the most appropriate metric for all types of digital marketing campaigns. For example, CPM may not be the best metric to use for campaigns focused on driving conversions or other specific actions.Depending on the campaign goals and objectives, other metrics like cost per click (CPC), cost per acquisition (CPA), or return on investment (ROI) may be more useful to track and optimize performance. You can always contact a digital marketing agency in case you need assistance.
