What is Cost Per Mille (CPM)?
Cost per Mille or CPM is the cost of displaying an ad to 1,000 people. It is used in most platforms, not just online ones. The term “mille” comes from the Latin word for “thousand,” so CPM literally means cost per thousand impressions.
How is Cost per Mille (CPM) Calculated?
To calculate CPM, divide the total cost of the ad campaign by the number of impressions, then multiply by 1,000. For example, if an advertiser spent $100 on a campaign that generated 50,000 impressions, the CPM would be $2. Advertisers can use CPM to compare the costs of different ad campaigns to determine the most effective and efficient.
- CPM = (CAMPAIGN COST / IMPRESSIONS) * 1,000
- (100 / 50,000) * 1,000
- CPM = 2
Advantages and Disadvantages of CPM in Marketing
One of the main advantages of CPM is that it is simple to calculate. CPM is also a useful metric for forecasting the costs of future campaigns and making budget decisions.
However, CPM has some limitations. It does not take into account the quality of impressions, or even the impressions among the intended audience. Additionally, click-through rate (CTR) or conversion rate may be more relevant depending on the campaign goals.
In conclusion, CPM remains a key tool for comparing the costs of different marketing campaigns, publishers, and channels. By understanding CPM, marketers can make informed decisions to optimize their campaigns to pay less per customer.