The cost per thousand impressions (CPM) is the advertising cost of showing the same ad 1,000 times. Indicates the value that is given to every 1,000 impressions of the same banner.
For example, if we give a value of 5 euros to the CPM of an ad and 30,000 impressions are produced, the cost per impression will rise to 150 euros, the result of multiplying 5 by 30.
CPM is used to increase brand awareness, and branding is worked on. The main objective is usually to increase the notoriety of the brand and improve its positioning with respect to the competition.
For other types of objectives, the CPM is not the most recommended since it can be a too high investment without clear results.
Advantages of CPM
The most prominent advantages are the following:
- In the case of digital advertising, you can know exactly the number of users who see the ad.
- It is a very reliable system to work on the branding of the brand.
Disadvantages of CPM
It has some disadvantages to use it:
- In traditional advertising, the measurement is usually not as accurate as it relies on audience measurement systems based on audience averages or analytical extrapolations.
- It is more reliable in the use of digital advertising.
CPM is the most similar cost model to traditional advertising. Both on television, on radio or in the press, the most normal thing is that the cost of the campaigns depends on the number of people who view it. For this reason, this model becomes a reliable tool in the digital sector.
This cost model is often used with display ads, although you can also run Google Adwords campaigns focused on CPM and not on the more common CPC (cost per click, ad revenue).
Formula to calculate CPM
CPM (cost per thousand impressions) is obtained by dividing cost by impressions and multiplying by 1,000, or also by multiplying CTR by CPC by 1,000. This is the formula for calculating CPM that is commonly used:
|CPM =||Cost||x 1,000||Impressions||CPM = CTR x CPC x 1,000 impressions|
|CPM =||Cost||x 1,000|