The online advertising industry is ever-changing. Especially after the pandemic, things quickly escalated.
Knowing about some of the terminologies is vital to get the upper hand —with CPM or cost per mille being one of them.
Let’s see what the hype is all about.
What Is Cost Per Mille (CPM)?
In Latin, “mille” translates to “thousands.” With that in mind, Cost Per Mille (CPM) is the price paid for 1,000 impressions per ad on one web page.
This means that the cost you bear for every 1000 views is CPM for every ad.
For instance, if the CPM for an ad is $5.00, then the advertiser has to pay $5.00 per 1,000 impressions of the ad.
Why is CPM important?
CPM is important to understand the usefulness of different media channels better.
An impression in CPM is the number of views or engagements an ad acquires.
Advertisers need to understand what impact their campaigns have on their target audience. It also helps them pave the way ahead in analyzing how much money to invest in future campaigns.
eCPM vs. CPM
The main difference between eCPM and CPM is one focuses on revenue, and the other, on expense.
eCPM showcases the average amount of ad revenue generated from 1000 ad impressions. In comparison, CPM represents the advertiser’s cost of 1000 ad impressions.
Essentially, eCPM stands for effective “Cost Per Mille” — the average of multiple CPMs, providing the total average of all advertiser bids for every ad impression.
CPM vs. CPC vs. CPA
Cost Per Mille (CPM) implies the cost per thousand impressions.
Meanwhile, Cost Per Click (CPC) is the price of each click paid by the advertiser to the publisher.
Lastly, Cost Per Action (CPA) indicates the amount the advertiser will pay the publisher for each action.
Impressions vs. Page Views
The difference between impressions and page views is that impressions are the number of times digital content has been viewed.
In comparison, page views are the number of visits the user makes to one of the website’s pages.
How is CPM cost calculated? What’s the Formula?`
The CPM cost is calculated by dividing the total cost of a campaign by the total number of impressions made and whatever the result comes out, multiply that number by 1,000.
Therefore, the formula would be:
CPM = (Cost of Campaign/Impressions) x 1000.
CPM calculation example
An example of CPM calculation would be, suppose the cost of your campaign is $20,000, and you want to have 300,000 impressions.
According to the formula, you need to divide your campaign cost by the number of impressions.
So you divide 20,000 by 300,000 - the result of which is 0.07. Afterward, you multiply this number by 1,000, which equals 70. Therefore, your Cost Per Mille (CPM) is 70.
Criticism of Cost Per Thousand (CPM)
A criticism of Cost Per Thousand (CPM) is that it also includes unloadable ads, imposter ads, and false counting impressions due to duplicate views.
Another significant disadvantage of using CPM is that you cannot ensure the quality of the traffic. It could be a heavy-traffic website, but it does not warrant quality traffic.
Due to the statistics having inaccurate readings, it becomes difficult to determine the precise number of clicks on a particular ad.
Frequently Asked Questions
What is the average cost per mille?
The average cost per mille (CPM) is the cost of having 1,000 on per website ad.
Why is cost per mille (CPM) important?
CPM is critical as it allows advertisers to evaluate the effectiveness of an ad. The lower the CPM, the more success an ad will bring for the advertisers.
What does CPM mean in pricing?
In pricing, CPM means the price advertisers pay for their ads to receive 1,000 impressions.
What is a good CPM cost?
A good CPM costs on average, $1.39, $1.38, $1.00, $1.75, and $0.78 for industries such as the telecommunications, general retail, health and beauty, publishing, and entertainment industries, respectively.
Final Thoughts on Cost Per Mille
The world of advertising is ever-changing. Advertisers must always be on the lookout and understand where they are going, right or wrong. Cost Per Mille (CPM) allows them to do just that.
That’s all for today on CPM. Thank you for bearing with us. We hope this will be beneficial in your digital marketing journey!