In the field of advertising, space purchases are carried out by an advertiser from an advertising agency. You can bill in several ways, by the number of clicks, the number of integrations, or by CPM (cost per thousand). This calculation method determines the cost of space for every 1,000 impressions. The appropriate advertising space for CPM advertising can be the Internet, television, radio, or print publications. In this publication, we will talk in detail about this type of marketing.
What is CPM in Marketing?
CPM is a marketing term used to refer to the cost per 1,000 ad impressions or web page views. This is the price an advertiser pays to have their ad seen 1,000 times by potential customers. This e-marketing tool can be very useful for you in developing your offer and increasing your sales.
Indeed, CPM is used in internet or email marketing, television, or radio. This is a metric that allows you to compare costs between different media. It can have two meanings, depending on whether it is approached in the general advertising context or in the field of Google display advertising.
The CPM criterion is used in combination with other criteria (location quality, audience quality, affinity, support impact, etc.) to select media in a media plan. However, please note that in this context, CPM is not a billing method, but an indicator for comparing the rates charged by media used in media planning.
How to calculate CPM?
The mathematical formula for CPM is relatively simple. This is the ratio between the price of the ad and the audience of the site where the ad will be published, multiplied by 1000.
- CPM= (ad cost/audience)*1000
Consider an example with a budget of $500. The audience of the site is 50,000 people. In this case, the CPM calculation looks like this:
- (500/50000)*1000= 10
This means that an advertiser pays $10 for 1,000 impressions of their ad.
CTR to track marketing CPM performance
A marketer needs a click-through rate (CTR) to measure the effectiveness of their online advertising. It can be used with other marketing KPIs to measure overall performance by PPC agency.
This metric is calculated by multiplying the number of clicks by the number of impressions multiplied by one hundred.
CTR reveals several aspects of a digital campaign. If it’s low, it means your ad isn’t reaching the right people. In this case, the company can adjust its target audience, find another site with a better location, etc.
How does it work in Internet media?
On the Internet, CPM is the standard method of estimating and billing for display advertising space, whereby the advertiser is billed according to the ad space rate expressed per thousand impressions of the creative (banner, video, etc.). CPM also corresponds to the fact that, with some exceptions, the volumes of campaigns are chosen by the advertiser, because the ad creative is dynamically displayed on the different media pages used, without showing the same ad each time. In the context of RTB, CPM is a measure of the cost of ad impressions, but they are sold on an impression-by-impression basis. This sales process enhances the image and proposition of the brand and increases the profitability of the campaign or giveaway contests, for example. This excellent tool for Google advertising is also a good management tool for the company.
How to conduct CPM marketing?
There are several ways to improve your CPM in affiliate marketing or email marketing. According to SmartyAds specialists, Internet marketing is about visual contact with the consumer: in other words, it is an impression that will be seen as the contact. On the web, you should use CPM if you want to get a high level of engagement with your ad that you think is attractive enough to get as many people as possible to click on it. This promoter can greatly develop your target audience as well as double your customer views.
On the other hand, if you don’t think your audience is large enough to aim for CPM, pay-per-click billing is often more interesting and profitable for you.
How to optimize a CPM marketing strategy?
CPM marketing gives better results in the case of an information campaign around a product or for brand promotion. This type of strategy is not suitable for a small company in a niche market. It’s also not suitable for brands that want to justify their ad spending with numerical results. CPM also cannot be used as a stand-alone tool. It should be combined with other strategies to achieve better results and increase the conversion rate.
Pros of CPM marketing
CPM marketing and advertising is a popular advertising pricing method due to its benefits, including an affordable budget, effective lead generation, and increased brand awareness. According to SmartyAds specialists, it offers a cost-effective solution for brands of all sizes, allowing advertisers to learn from their campaigns and adjust their ads accordingly. Advertising platforms offer various formulas for targeting quality leads, allowing companies to create a catalog of leads and increase conversions. However, CPM marketing also has its weaknesses, such as its potential for generating negative publicity.
Cons of CPM marketing
CPM online advertising is a controversial marketing strategy due to concerns about traffic quality, ad placement, and the lack of control over ad placement. It also overlooks conversions and clicks, which may increase awareness but may not lead to action. Additionally, CPM is susceptible to fraud, as platforms can manipulate impressions with bots, making it crucial to work with a trustworthy vendor.
Conclusion
The cost per thousand impressions (CPM) of an advertisement on a website or other platform is a crucial number to ascertain for advertisers. This crucial unit of measurement is utilized to assess the efficacy and cost-effectiveness of advertising campaigns in addition to billing for online advertising space. Simply divide the campaign’s total cost by the total number of impressions, then multiply the result by 1000 to get the CPM. In advertising budget optimization, CPM is an important indicator, particularly when compared to other metrics like CPC and CPA. As you continue to test and tweak your campaign settings, be sure to optimize factors like ad content, ad type, placement, and targeting in order to raise your CPM.
