What is CPM in Digital Marketing? Meaning, Formula & Importance
Recent Post
Get A Free Quote
What is CPM in Digital Marketing? Meaning, Formula & Importance
If you have ever been familiar with the functioning of digital marketing at some point in time, making some time to know about something called CPM would have become essential. It arrives every now and then in ad campaigns, in dashboards, or while formulating hands-on media buying strategies. But what does it actually mean, and why should you care?
Let us dissect it in simpler, real-world terms.
What is CPM?
The abbreviation CPM stands for Cost Per Mille, with Mille being the Latin word for one thousand. So, CPM is just the price to display an ad is for 1,000 times. Therefore, it is for 1,000 impressions.
Remember that impressions are never clicks. An impression is the total count of times a particular ad is displayed to the users. It is not about clicks. If an ad appears on the monitor of an ad-viewer, it is automatically counted as one impression.
For example, your ad gets viewed 1,000 times on a website, and the website charges you for this advertisement $5; in this case, your CPM would be $5.
How to Calculate CPM?
With this easy formula, you can calculate CPM.
CPM = (Total Ad Spend / Total Impressions) × 1,000
You had spent, bare in mind, $200 on a particular campaign that created 50,000 impressions.
CPM = ($200 / 50,000) × 1,000 = $4
Basically, you are paying $4 for the appearance of your ad a thousand times. Nice deal, huh?
Why does CPM Matter?
The internet banner advertising is almost one of the track top sellers with CPM price models for governing such a campaign.
Here is the importance of CPM:
- Fantastic for Brand Presence
CPM makes sure that your brand reaches many without worrying about click-through. If exposure, getting noticed, spreading awareness, or visibility is important to you-CMP is your best friend.
- Cost-Effective on a Larger Scale
Because the advertiser pays per impression and not per action, CPM campaigns happen to be very cost-effective while aiming to generate visibility for thousands or millions of people.
- Easy to Measure
It is simply to track CPM, thus enabling the advertisers how much they’ve paid to be noticed. When CPM rates are compared across platforms, Google, Facebook, Instagram, or other platforms help you decide which channel gave you exposure at the best price.
- Supports Top-of-Funnel Goals
CPM is working for the upper funnel. When an audience doesn’t know who you are, CPM campaigns introduce first exposure to them. Digital billboarding is just a term for a whole lot of mass exposure at breakneck speed.
When Should You Use CPM?
CPM is best while the plan’s goal isn’t immediate action (purchasing, signing up) but maybe more of awareness, such as:
- Launching a new product
- Promoting an event
- Running video ads
- Building awareness for brand recognition
If your objectives are about direct conversion (sale or lead), consider checking into different models like CPC (cost per click) or CPA (cost per action).
Final Words
CPM may seem one of those buzzwords in marketing, but it is such a simple and powerful metric. It tells brands what they are paying for to be before the eyes of a few and from there begins a relationship, builds trust, and ultimately loyal customers. Attention being the new currency, CPM helps you purchase just that.