CPM, which stands for Cost Per Thousand, is a term used in digital marketing to denote the price of 1,000 impressions of an ad on a web page. The "M" in CPM represents the Roman numeral for thousand. This billing model is commonly used by advertisers looking to increase visibility and brand awareness, rather than driving clicks or direct conversions.
In a CPM campaign, the advertiser pays for the number of times their ad is shown, regardless of whether users interact with it or not. Therefore, it is especially useful for campaigns aimed at increasing brand awareness or visibility of a product or service.
CPM is calculated by dividing the total cost of the ad campaign by the total number of impressions, and then multiplying the result by a thousand. For example, if an advertising campaign costs €100 and generates 10,000 impressions, the CPM would be €10.
In the CPM model, advertisers typically bid for ad space on websites or platforms that have high user traffic and are relevant to their target market. The advertiser offering the highest CPM usually gets the ad space.
The CPM model offers several advantages for advertisers. These advantages include:
Although CPM has its advantages, there are also some considerations to keep in mind when using this advertising model.
CPM is just one of several billing models used in online advertising. Other models include Cost Per Click (CPC), where advertisers pay each time a user clicks on their ad, and Cost Per Acquisition (CPA), where advertisers pay when users take a specific action, such as making a purchase or signing up for a service.
Each of these models has its own advantages and disadvantages, and may be more or less suitable for different types of advertising campaigns. For example, while CPM may be more effective for brand awareness campaigns, CPC may be more effective for campaigns aimed at driving traffic to a website, and CPA may be the best choice for campaigns aimed at generating conversions.
It's important for advertisers to understand these different billing models and select the one that best suits their advertising goals.