Cost per mille (CPM): What is its role in marketing

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April 14, 2023

Cost per mille stands for cost per thousands of impressions. Meaning, it’s the amount that advertisers pay to display 1 000 ad impressions or the average amount marketers pay every thousand times that internet browser delivers your ad. Therefore, CPM is a pricing model in programmatic advertising. To help you better understand the CPM essence and role in marketing,

Alpha Efficiency has made this article, hopefully making this subject more understandable and clear.

Besides a CPM, there are many other digital advertising measuring metrics that determine the pricing method. Different pricing methods are appropriate for different advertising campaigns. The pricing method can be based on the frequency of ad appearance, number of clicks, leads to a sale, and other aspects. Pricing can be tailored to the specific intended function of a particular ad campaign.

The CPM approach is focused on exposure, contrary to, for example, the cost-per-click method that is based on the number of clicks. While CPM measures the number of times an ad was displayed on a website, it doesn’t measure clicks on an ad.

What is CPM?

As we mentioned, cost per mille is a pricing method that is the most common in digital advertising. Programmatic advertising has certain types that are measured by CPM. The CPM model is often with large publishers that pay a set price established by the number of impressions that each placement receives monthly or quarterly. Examples of CPM are Facebook ad campaigns, audio ads, DSPs, and Sponsored Displays on Amazon.The advantage of CPM is that it usually costs less than other marketing strategies. The CPM method provides advertisers to pay for impressions after they get the guaranteed results. However, measuring the “impressions” can be difficult. Platforms count the impressions by their criteria. This usually considers any time that platform serves the ad and the ad is viewable by the platform’s principles. When it comes to CPM, this pricing technique is usually applied to ads to improve awareness and exposure of a brand or product or convey a specific message. As the CPM method is considered targeted at a wider population, CPM is inadequate for small and new businesses and niche companies that are directly addressed to a smaller population subset. CPM is also inappropriate practice for companies that require quantifiable results to support their marketing budget.CPM metric doesn`t require optimizing, however, it is excellent in campaign interpretation. Extremely high CPM indicates possible issues regarding targeting or leads. This alert directs the company to reconsider the quality of the network and the ads placements. When considering a CPM for your strategy, you must comprehend your business goals, whether the CPM model can measure your goals, define specific goals of your strategy, the definition of a lead, and determine the proper ways to track the awareness of your newly generated customers.However, the CPM strategy by itself is insufficient for success. The best results of the CPM strategy are achievable when integrated with another marketing approach (email marketing or retargeting, for instance) that can follow up on your leads and convert them into customers.

The role of CPM in marketing?

Digital marketing considers numerous elements. The most significant benefit of CPM is its ability to raise brand awareness and recognition. Launching CPM helps reach a wide population after which a company can run more targeted ad campaigns addressed to subsets. As the CPM is brand-oriented, it is a great strategy to proceed with a campaign that is more conversion-oriented.

CPM is also considered a top-of-the-funnel strategy as it focuses on capturing a wide audience. However, this strategy only supports the top of the funnel while carrying on the entire funnel needs additional strategies.

When it comes to ad publishers, they favor the CPM method as it provides them with a profit for just displaying the ads. However, for publishers to gain a significant amount, the website traffic has to be robust.

The average CPM rates are usually low and depend on each platform and website individually. For instance, social media platforms often have higher CPM rates but these too vary from one to another. Facebook and Instagram have a CPM rate of 9$ while LinkedIn and Twitter are around 6,5$.

How to measure CPM?

To figure CPM there is a simple formula that encompasses the basic data of the CPM campaign:

Total campaigns costs
Number of impressions that the CPM campaign received

To calculate CPM, divide the total campaign costs by the number of impressions and multiply it by 1 000. You will generate the CPM figure which is known as a CPM rate.

Final Thoughts

The issue that advertisers find in the CPM method is the ability to measure the impressions, and therefore the concerns about whether they are fairly charged. The problem of impressions refers to duplicate visitors, internet bots, and incomplete loads. However, the CPM strategy is still a proven way to boost your brand and product awareness, sales conversion, and marketing efficiency.

Gerard Palmer

I'm a content writer, author and blogger with years of experience in writing, researching and editing content. I've written for various websites on topics that include business, technology, education and more. I also enjoy blogging about my thoughts on life as well as the latest happenings around the world. Currently living in the US, but I enjoy exploring new places while traveling solo or sometimes with my partner. Books are one of my favorite things to do while on holiday because it gives me an excuse not to talk!

Gerard Palmer