Cost Per Mille (CPM) Term Meaning

Cost Per Mille (CPM) is a digital advertising pricing model where advertisers pay for every 1,000 impressions their ad receives. It is a common metric used in online advertising to measure the cost-effectiveness of ad campaigns in terms of reach and visibility.

Detailed Explanation

CPM is calculated by dividing the total cost of the advertising campaign by the number of impressions (in thousands) it receives. For example, if an advertiser spends $500 on a campaign that receives 100,000 impressions, the CPM would be $5. CPM is particularly useful for brand awareness campaigns where the goal is to maximize exposure rather than direct conversions. Advertisers use CPM to compare the efficiency of different advertising platforms and strategies. Lower CPM values indicate more cost-effective campaigns with greater reach. Platforms like Google Ads, Facebook Ads, and display advertising networks often use CPM as a pricing model, allowing advertisers to budget for a broad audience reach and track the performance of their ad campaigns.

Key Points

• What it is: A digital advertising pricing model where advertisers pay for every 1,000 impressions their ad receives.
• Why it matters: Measures the cost-effectiveness of ad campaigns in terms of reach and visibility, and is useful for brand awareness campaigns.
• How to use it: Calculate CPM by dividing the total cost by the number of impressions (in thousands), and use it to compare the efficiency of different advertising platforms and strategies.

Examples

1. Display Advertising: A company spends $2,000 on a display ad campaign that receives 500,000 impressions, resulting in a CPM of $4.
2. Social Media Ads: An advertiser runs a Facebook ad campaign with a budget of $1,500, achieving 300,000 impressions and a CPM of $5.

Related Terms

• Cost Per Click (CPC)
• Cost Per Acquisition (CPA)
• Cost Per Lead (CPL)
• Impressions