What is CPM?
CPM is an acronym for the term 'cost per mille'. Mille is the Latin word for thousand and this term is also referred to as "cost per thousand' and 'cost per impressions'.
CPM is a pricing model that is used in advertising campaigns and digital marketing where advertisers pay per thousand impressions that their ad receives.
Your CPM is £00.00
CPM is typically used in digital marketing when an advertiser pays or bids on 'ad space' and pays for the number of ad impressions they receive.
An impression is a term used to refer to the action of an ad being displayed on a user's screen. This is counted regardless of if a user interacts with the ad in any way or not (for example the click-through rate will not be factored into the CPM model).
CPM is just one of many pricing models that are used in digital marketing. Other examples of pricing models include CPC (Cost-Per-Click), CPA (Cost-Per-Action), ROAS (Return On Ad Spend) and ROI (Return On Investment).
Why Calculate CPM?
Calculating CPM is important for many reasons.
Working out what your total budget is can be crucial when measuring CPM as a model for your advertising campaign.
Working out the number of impressions you receive and how much you are paying for this is crucial to be able to calculate what an effective advertising budget will be for your business. By using this data you can calculate how much you will need to spend in order to achieve a specific number of impressions and adjust the campaigns as necessary.
Comparing Advertising Costs
The CPM model also allows you to make a clear comparison between different advertising costs over different platforms, ad formats, and different campaigns.
Return On Investment
Knowing the CPM is beneficial when working out the return on investment of your advertising efforts. Here you can compare the cost of the advertising to the generated revenue from the ads to determine how profitable your marketing efforts have been.
Online marketers can use CPM to track their advertising campaigns' performance and use it to identify areas that can be optimised for maximum performance and efficiency.
Being informed about what CPM is, how it works, and how to monitor your own CPM is beneficial when it comes to making decisions regarding your online marketing strategy.
Giving You Data To Monitor
When you regularly calculate CPM you can identify patterns and trends in your ad placement and impressions. This kind of data will allow you to identify potential seasonal trends, how many impressions you get, whether you have a good CPM or not for your business and where you can achieve a lower CPM.
How To Calculate CPM
To calculate CPM you will need to use the CPM formula. First, you will need to determine the total cost of your ad campaign and all the costs involved in creating, placing and running the ad. After this, you will need to determine the total number of impressions your ad had received (you can find this out from the network or analytics platform you use).
After you have got the total number of impressions you will need to follow the formula below.
The formula to calculate CPM is:
CPM = (Total Cost Of Ad Campaign/ Total Number of Impressions) X 1000
For example, if your ad campaign cost £10,000 and received 500,000 impressions, the CPM would be:
CPM = (£10,000 / 500,000) x 1000 CPM = £20
So the CPM for this campaign would be £20 per thousand impressions.
Using A CPM Calculator
For your ease and convenience, we have created this CPM calculator to help you save time in working out your CPM and ensure that it is accurately calculated.