CPM is the term used in online or digital marketing, which stands for “Cost per thousand impressions,” which can be defined as how much money an advertiser or online marketer spends to get per thousand impressions; impressions can be further defined as viewers, visitors or purchases.
The term CPM or “Cost per thousand impressions” can be used in traditional marketing too. The ‘M’ in CPM refers to 1000 of Roman numerology.
“Cost per impressions” or CPM helps online marketer or advertiser to understand and analyze the cost-effectiveness and what profit he is getting from an advertisement regarding traffics, views, purchases or any other intended goal of an advertiser.
CPC (Cost per click) and cost per order too helps an advertiser to analyze profitability and cost-effectiveness of an advertisement with “Cost per impressions” or CPM.
Calculating CPM - Cost Per Thousand Impressions
The “Cost per impression” or CPM can be calculated as the amount spent for an advertisement divided by how many times the advertisement is displayed to online user or visitors broken down in the set of one thousand.
For example, let’s say it costs 1000$ to an advertiser to have 1,00,000 impressions then “Cost per impression” or cost to reach per thousand viewers or visitors will be 10$, that is 1,00,00 divided by thousand will be 100, and 1000$ divided by 100 will be 10$.
Let’s take one more example to suppose another advertiser spends 250$ and get 50,000 impressions or reach out to 50,000 online users then “cost per impression” will be 5$, as 50,000 broken down into 1000 visitors (50,000 divided by 1000), will be 50, and 250$ divided by 50 will be 5$.
“Impression” is different than “Page view.”
The impression can be further understood by how many times an advertisement is displayed to the internet user which is very different from the page view.
A single web page may contain some advertisement but for all the advertisement displayed on that page will have only one impression. An Ad server has lots of automated features which prevent spam activities, refreshes, etc. Otherwise, it will result in unrealistic “Cost per impressions” or CPM.
Comparing CPM with CPC and CPA
In an actual sense all CPM, CPC, and CPA give the idea about tracking money spent, and output and advertiser are getting regarding views, traffic, and profitability.
CPC or “Cost per click” is the money spent by an advertiser every time his advertisement is being clicked and CPA or “Cost per acquisition” is the amount spent by an advertiser every time something is being purchased or fulfill marketing goal of an advertiser.
These all pricing or money tracking methods have their importance according to the marketing campaign set by an online marketer or an advertiser.
CPM method of tracking money spent on the advertisement is mostly used when an online marketer or advertiser wants to increase his brand value or wants to establish brand awareness rather than purchases.
In the CPM method of tracking, it's more a message to the potential client or viewers, and CTR doesn’t seem to be much value to online advertiser or marketer.
Because online marketer or advertiser wishes to have his advertisement to get much exposure in that website which is already having high traffic and it does not matter to the online marketer or advertiser whether the online user clicks on his advertisement or not.
Online marketer or advertiser if mainly focuses on promoting the specific products or signups will tend to focus more on CPC or CPA, in this case, marketer primary focus is not mass appeal but advertiser will only pay when his advertisement get clicked by the online user.
Many web advertisers follow CPM because they get paid just by advertising various websites, so naturally, CPM rates will be low, and 2$ is considered to be fair standard, and online marketer or advertiser need to get robust traffic to make a profit using CPM method of advertisement.
More about CPM(Cost per thousand impressions)
If an advertiser or online marketer wish to get a fair idea about the online campaign he doesn’t need to rely on CPM only itself in fact advertiser should compare different advertisement methods.
If an advertiser needs to sell sports shoes to men, then he will mainly focus to advertise to men only, if his advertisement gets circulated between women clients, then it will be waste of CPM, or it will not give him desired results in the long term.
That’s why calculating or analyzing CPM will give a clear idea only when the advertisement is being displayed or circulated in the relevant territory or relevant potential clients or customers.
Another thing online advertiser or marketer keep in mind to get a bright idea of CPM is how the particular medium is being used or delivered. If an advertiser pays 200$ for 2,00,000 impressions does not mean all the impressions will be picked or displayed to the proper medium or channel.
It also includes timings of displaying impressions too, suppose an advertisement is displayed at a time when there is meager traffic in the particular website this will also don’t give profitable results to the online marketer or advertiser.
Google Search Analytics
Search analytics is a handy tool or method for an online advertiser or marketer; it analyzes various search data to understand and investigate search interaction among internet users, which includes the various contents.
So, search analytics helps an advertiser to understand the working of search engines and results in better performance while working with an online campaign using search engines.
Search analytics also includes search volume trends and analysis, reverse searching which means entering keywords to see the resulting websites, monitoring of keywords, search results and history of an advertisement, website comparison and affiliate marketing.
Good understanding of online user psychology and identifying websites with higher traffic is always beneficial for the online marketer or advertiser and results in higher conversion rates and improved profitability.