Did you know that 55% of all advertising is digital? No matter what type of business you run, digital advertising will likely account for more than half the leads you generate and more than half the visibility. Maybe even more than half the success you have. Given how important digital advertising is, it only makes sense that you understand what’s known as the bedrock of digital advertising: CPMs.
With CPMs, you can enhance your digital advertising strategy, resulting in business growth, better customer retention, and satisfying returns on your marketing investments.
What’s the definition of the term “CPM?”
CPM stands for “cost per thousand” and is also known as “cost per mille.” Mille is Latin for thousands, and “M” is the Roman numeral for thousands – hence the “M” in CPM.
CPM is a marketing term used to describe the cost of one thousand advertisement impressions made on one web page. An impression is counted whenever an ad is displayed.
It’s one of the many methods used to gauge the price of online ads. Others include CPC (cost per click) and CPA (cost per acquisition). What makes CPM the bedrock, however, is that it simply measures impressions – not clicks or shares, which are more challenging to generate.
Any viewer engagement an advertisement receives will go toward the final CPM count.
How does CPM work in digital marketing?
CPM is all about tallying digital ad impressions. An ad impression is a marketing metric that counts the number of views a piece of content receives from users on websites and social media.
Also called “ad views,” impressions are responsible for counting the views (not clicks) an ad may receive. CPM, then, measures how much a website charges the advertiser for every 1,000 impressions that appear on the site.
For example, when a website publishes an advertisement and charges $1 per CPM, this means the advertiser must pay $1 for every 1,000 impressions the ad makes.
How can you calculate the cost of your ad?
Calculating CPM is simple. Multiply the total number of on-site impressions by the CPM rate. Then divide that number by 1,000.
Here’s an example showing how to measure the cost on your CPM campaign:
Start with your CPM rate: Let’s say you’re an auto business and your CPM rate is $1.43 (this is the average for the auto industry). CPM rates commonly fall between $1-$2, though some industries (like legal) can be more than $5.
Multiply your CPM rate by the number of impressions: As your automotive ad campaign rolls out, your ad will collect impressions every time it’s displayed to users on the publishing site. Let’s say your ad campaign ended with 6,000 impressions. To calculate CPM, multiply the number of impressions by your CPM rate:
Divide by 1,000: Once you have that value, divide it by 1,000:
Are there any formulas or calculators for CPM?
If you don’t want to calculate CPM yourself, there are calculators you can use to get the cost of your ad campaign.
Websites like the Online Advertising Guide have a calculator, for instance, for when you need to know your CPM quickly and accurately. You can also use filters such as country and channel for even more accuracy.
How relevant are CPMs today?
Digital marketing is constantly evolving. You might wonder whether CPMs will remain an important metric for digital advertising.
Whether you run a website, multiple social media channels, a YouTube channel, or all of the above, CPM remains an important metric for analyzing the content most valuable to advertisers.
CPM campaigns also remain helpful in a number of ways, improving credibility, offering relevant leads, and generating industry buzz.
Consider not just where to find an audience, but who your audience is. This is closely connected with how CPMs offer relevant leads – marketers must target the right people through refined marketing and segmentation so none of the cost of a CPM campaign goes to waste. When all viewers are the right viewers, you’re getting your business in front of the people who will truly care about the message.
Ensuring that your ads are compelling is how CPMs are relevant today. Any old banner ad telling you to “CLICK HERE!” simply won’t work. What you put into your CPM campaign is what you’ll get out of it.
You can make ads inviting with messaging that’s concise, clever, and attention-grabbing without being clickbait. Visuals should also be compelling, memorable, and complement the messaging.
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