What is CPM?
CPM, or Cost Per Mille, is an online advertising model that represents the cost of ad impressions per one thousand views. The term comes from the Latin word ‘mille,’ which means a thousand. Websites and online platforms use the CPM model to calculate their advertising revenue.
How is it calculated?
If the CPM of an ad is 500 Huf, the advertiser must pay 500 Huf to the platform or website owner every time the ad is displayed a thousand times.
Why is CPM important?
CPM is a key metric that indicates how much it costs an advertiser to reach their target audience. It helps advertisers compare the efficiency and cost of different advertising platforms. The value of CPM can provide insights into the cost of reaching an audience and the difficulty in achieving that reach.
When should you use CPM?
CPM is most relevant when the primary goal of a campaign is to boost brand awareness or communicate a message to a broad audience.
CPM in different media
- Digital Advertising: CPM is the most common metric in the digital space since online impressions are easy to measure.
- Print Media: In newspapers and magazines, calculating CPM is more complex, as it must consider the print run.
- Television and Radio: Here, CPM is calculated based on audience ratings.
Advantages and disadvantages
Advantages
- Transparency: CPM provides clear insight into how much advertisers pay for every thousand impressions.
- Comparability: Advertisers can compare CPM rates across different platforms to find the best value.
Disadvantages
- Doesn’t always reflect true effectiveness: CPM doesn’t take into account the actual impact of an ad, such as CTR (Click-Through Rate) or conversion rate.
- Difficult to compare across media types: Different media platforms may not give a comparable view of CPM.
CPM in marketing strategies
CPM is often used in various marketing strategies. For instance, in a brand awareness campaign, CPM helps estimate the cost of reaching a wide audience.
In contrast, for more targeted campaigns focused on conversions, other metrics such as CPC (Cost Per Click) or CPA (Cost Per Action) may be more relevant.