Glossary Cost Per Mille (CPM)
What Is Cost Per Mille (CPM)?
Cost Per Mille (CPM) is a metric that measures the cost of 1,000 impressions of an ad. It is used to assess the cost-effectiveness of ad placements based on how many times an ad is viewed.
How to Calculate Cost Per Mille
- Cost Per Mille = (Total Ad Spend / Number of Impressions) x 1,000
Examples of Cost Per Mille Calculation
- Example 1: If an ad campaign costs $1,000 and generates 200,000 impressions, the CPM is ($1,000 / 200,000) x 1,000 = $5.
- Example 2: An ad spend of $500 resulting in 100,000 impressions yields a CPM of ($500 / 100,000) x 1,000 = $5.
Key Points about Cost Per Mille
- CPM measures the cost of delivering an ad to 1,000 users and is often used for brand awareness campaigns.
- Lower CPM indicates more cost-effective ad placements for reaching a large audience.
- Tracking CPM helps optimize ad spending and evaluate the efficiency of ad placements.
Cost Per Mille Best Practices
- Target Audience: Refine audience targeting to ensure that impressions are delivered to relevant users.
- Ad Placement: Choose high-visibility placements to maximize the effectiveness of impressions and minimize CPM.
- Monitor Metrics: Track CPM alongside other metrics like CTR and conversion rates to evaluate overall campaign performance.
Considerations
- Ad Visibility: Ensure that ads are placed in prominent positions to achieve higher visibility and better ROI.
- Ad Frequency: Balance ad frequency to avoid overexposure and maintain user engagement.
- Industry Standards: Compare CPM with industry standards to assess cost-effectiveness and optimize budget allocation.
