What is CPM?
Cost per thousand impressions (CPM), often known as cost per mile, is a paid advertising option frequently used to calculate how many thousands of individuals your marketing or advertising item has made an impression on. It simply states the total amount spent on advertising for every 1,000 impressions. An “impression” is when a campaign or ad is viewed by a user on social media, search engines, or any other marketing channel.
This type of pricing structure is used in and is essential for:
- Display ads on Google Display Network
- eCommerce businesses that run affiliate networks
- Campaigns intended to reach millions of people
- Companies wishing to increase brand exposure among new followers on social media platforms like Facebook
CPM Calculation
It is a formula that determines the total amount spent on advertisements for every 1,000 page views.
CPM marketing: How To Get Started
A foundation based on the following three elements must be established before launching a successful CPM marketing plan, campaign, or other approach employing this strategy:
- Thorough knowledge of what a lead is, awareness, as well as the meaning of the CPM metric to your business and plan.
- Apart from your entire budget, a set distinct budget for this aspect of your marketing.
- A strategy for the subsequent phases of your overall marketing campaign.
Identifying and assessing progress is exceedingly challenging if these three pillars are not in place before a CPM strategy is implemented.
What is considered a good CPM?
It is impossible to define CPM for effective cost based on a single number, as is the case with most digital marketing KPIs and pricing structures.
You may figure out whether your CPM impressions are an appropriate price strategy for your advertising ventures by reviewing previous campaigns, comparing outcomes to industry norms, and assessing the effect of CPM on your ROI.
From an advertiser’s viewpoint, it is logical that the less amount you have to pay to advertise, the better. However, a lower CPM is not necessarily a good sign for an advertiser because it might mean that the traffic is of inferior quality. Similar to this, for publishers, having a high CPM does not always equate to better revenue because certain ad inventory may not be sold.
CPM vs CPC vs CPA
| CPM | CPC | CPA |
| The advertiser is charged whenever a promotional message is successfully displayed on a user’s web browser. | Requires a company to pay each time a customer clicks on an advertisement | A business is charged every time a customer takes the desired action and is converted |
| This is excellent for internet marketing efforts and social campaigns that emphasize specific messaging and raising brand awareness. | It is used to promote a unique product to an extremely narrow audience | The objective is to get the audience to buy an item or service. |
Benefits of CPM marketing
Compared to CPA or CPC advertising, CPM marketing is typically less expensive. However, it depends on where you’re displaying your ads, so it might be necessary to bid more for placement if you want to reach a larger audience on a popular website or to appear in front of a larger group of customers. It is possible to use precise targeting techniques on social media platforms like Facebook to target a more specific audience. Through social targeting and a CPM campaign, it is easy to develop awareness rapidly for a very minimal cost.
CPM campaigns are beneficial in more areas, such as
- Enhance credibility: Before being taken seriously by their audience, online enterprises must become well-established in their target market. CPM ads increase awareness, causing consumers to become more acquainted with the latest businesses.
- Ensure high-quality leads: CPM advertising techniques enable businesses to target just the most significant clients. CPM techniques can open up thousands of potential traffic sources.
- Boost industry awareness: The ideal CPM tactics create a lot of hype, which eventually drives more traffic and conversions provided the campaign’s display ads or content are of exceptional quality.
Factors that influence CPM
It would be impossible to describe all the variables that influence typical CPM costs for a CPM marketing campaign, however, to interpret the numerous aspects that affect CPM advertisements, they are often divided into four basic groups:
Context
There are several factors to consider when considering context, including
- Audience intent: This refers to the potential buyer’s stage in the marketing funnel, and will yield a higher CPM if the audience is getting near to making a purchase decision or completing a purchase.
- The quality of the ad space: Since LinkedIn caters to a specific audience, it has the highest CPM of all social media platforms.
- The session length of a visitor on a website: Facebook or YouTube ads tend to have a higher CPM than non-social websites due to visitors spending more time on social networks.
Audience
Factors related to the audience that impact CPM:
- Geographic presence: The location of your target audience matters since it affects their purchasing power and how developed their online advertising market is.
- Devices in play: Considering user experience and interactions differ between different types of devices, it is important to take into account the type of device the audience is likely to use to access a website. Despite an increase in mobile usage, customers are still much more likely to purchase a desktop computer due to elements such as internet speed, data restriction, and screen size. This could result in higher advertising CPM for desktop users.
On-page elements
Some of the on-page components that influence CPM are:
- Ad viewability: Google states that an advertisement is considered to be “viewable” when at least 50% of it is visible for one second or more
- Ad placement: The area where a visitor is most likely to stay a while is considered the ideal location.
- Ad size: The size of the advertisement counts; larger ads are typically more expensive.
- Ad format: Although a video ad or one with animation is more likely to catch viewers’ attention, publishers don’t want their audience to be diverted from their content by the ad, therefore more eye-catching formats drive up the price of an advertising campaign.
Seasonal factors
Depending on the kind of service or consumer product that is being promoted, taking the season into account is important. While outdoor sports equipment, for example, will have an increase in CPM during warm weather seasons, retail products have a greater CPM during the holiday gift-buying season.
Strategies to optimize CPM
Publishers and ad industry experts might start attempting to obtain the highest CPM after they comprehend what it means. Below are the top campaign optimization suggestions:
- Select an ad network
It can be difficult for small businesses that are just getting started with display advertising to know where to begin or even if running advertisements on a CPM basis is the best option. Understanding the factors affecting CPM rates and the seasonality of optimization adjustments is crucial.
A variety of ad networks, like Google AdSense, Criteo, and SmartyAds, to mention a few, are accessible and may be used to leverage CPM tactics.
- Choose a relevant ad tool
To assist you with the planning, execution, monitoring, and analysis of your campaigns, you must choose a CPM software and ad tool. Example: HubSpot Ads Software
- Take seasonal variations into account
To more accurately assess your performance and project future income, it’s crucial to be ready for any seasonal fluctuations in CPM rates. Analyze your historical data to see where your CPM tends to dip. Consider your market from a consumer’s point of view. For a dating website, for instance, February will be a huge month since marketers would significantly raise their spending around Valentine’s Day.
Working with the CPM model can help you anticipate these variations, which will help you manage your cash flow so that you are not caught off guard when a dip suddenly appears.
- Concentrate on ad format and placement
To better understand what will resonate with your audience and what is successful for your rivals, conduct research on your buyer profiles, target audience, and competitive intelligence. Testing elements based on this research will enable you to choose the ad formats and locations that will be most effective for you.
- Choose the relevant type of campaigns
Broad marketing campaigns and adverts work well with CPM campaigns. This is because their major purpose is to increase brand recognition. They provide the knowledge and information organizations want to target customers and make follow-up advertising more precise.
- Highlight unique features
Make sure your advertisement highlights the distinctive qualities of your product that can make it stand out from the competition because CPM advertising tends to be widely distributed.
CPM techniques must be continually tested and analyzed to see what is effective, just like all other marketing tactics.
