CPM, which stands for cost per thousand, is a common pricing model used in internet marketing campaigns. It is a way for advertisers to pay for the number of impressions (i.e., views) their ad receives rather than the number of clicks or conversions it generates. In this article, you will explore what CPM is, how it is being calculated, and how it applies to internet marketing campaigns.
How CPM is Calculated
CPM is calculated by dividing the cost of a single ad campaign by the number of impressions (in thousands) the ad receives. For example, if an ad campaign costs $500 and it receives 1,000,000 impressions, the CPM would be $0.50. This means that for every thousand impressions the ad receives, the advertiser pays $0.50.
Advantages and Disadvantages of CPM
One of the main advantages of CPM is that it allows advertisers to control their advertising costs. They can set a budget for their ad campaign and know exactly how much they will be spending for every thousand impressions. Additionally, CPM is an effective pricing model for increasing brand awareness and reach, as it allows the ad to be seen by a large number of people.
CPM in Display Advertising
CPM is commonly used in display advertising, including banner ads, video ads, and other non-text ads. Display ads are typically sold on a CPM basis because they rely on impressions to be effective.
Advertisers want to ensure that as many people see their ad as possible, and CPM allows them to do that. Additionally, CPM is an effective pricing model for display ads because it allows advertisers to control their advertising costs.
CPM in Social Media Advertising
CPM is also used in social media advertising, which includes ads on platforms like Facebook, Instagram, and Twitter. Social media advertising is typically sold on a CPC (cost per click) or CPA (cost per action) basis, but CPM is still an option.
Advertisers can choose to pay for social media advertising on a CPM basis if they want to ensure that many people see their ad. Additionally, social media platforms typically offer targeting options that allow advertisers to reach specific demographics, which can help increase CPM-based campaigns’ effectiveness. For example, Adroll professionals mention, “Google Ads works on a CPC and a CPM basis.”
CPM in Search Advertising
CPM is less commonly used in search advertising, which includes ads that appear on search engine results pages (SERPs). Search ads are typically sold on a CPC or CPA basis, as they rely on clicks or conversions to be effective. However, CPM can still be used in search advertising, particularly in cases where the advertiser wants to increase brand awareness or drive traffic to their website.
In conclusion, CPM is a common pricing model used in internet marketing campaigns. It is calculated by dividing the cost of one ad campaign by the number of impressions it receives and is typically used in display and social media advertising. CPM is an effective pricing model for these types of ads because it allows advertisers to control their advertising costs and reach a large number of people.
CPM can also be used in search advertising, particularly when the advertiser wants to increase brand awareness or drive traffic to their website.
