What does the Cost Per Mille (CPM) impression mean?
Cost Per Mille (CPM) is a marketing term that refers to the cost of advertising to one thousand viewers or impressions. CPM is also known as cost per thousand (CPT) or cost per impression (CPI).
Why is CPM important?
CPM is just one of many digital advertising pricing models that are appropriate for various types of ad campaigns. A cost per mille model is used by advertisers working on brand awareness or targeted messaging because it captures exposures rather than "clicks."
Assume you've just perfected the perfect vegan, gluten-free granola and want to get your name out there. Serving your ads on the Whole Foods website or other local organic market websites increases brand awareness and creates a "coolness by association" factor, which can aid in brand recognition.
CPM is the way to go in this scenario, where you are in a niche market with a niche product, to begin building recognition of your name and brand.
How do you calculate CPM?
Cost per thousand is an important metric that can be expressed formulaically as:
CPM= ( Total Campaign Spend ÷ Number of Impressions ) × 1,000
So, if you paid $1,500 to a publisher to serve your ad and it received 750,000 impressions, you paid $2 for every 1,000 impressions.
What is the difference between CPM and eCPM?
To begin with, eCPM is a metric used by publishers.
Assume a mobile app's ad earned $175 per day and received 100,000 ad impressions. As a result, the publisher's or app developer's eCPM is calculated as follows:
$175 ÷ 100,000 × 1,000 = $1.75 eCPM
In other words, the publisher or app developer will earn $1.75 for every 1,000 impressions.
CPM, on the other hand, is a price and reach metric used to estimate the cost of a campaign and its reach within the confines of an advertiser's budget.
What is the difference between CPM and CPC?
Rather than paying per 1,000 impressions, advertisers in the cost-per-click (CPC) model pay per click, so if the ad receives no clicks, the advertiser is not charged.
Advertisers whose ads aren't getting much love from those clicks may still receive thousands of free impressions because people see the ad even if they choose not to "click." Obviously, this means that you will not be paid as a publisher.
This method can be very expensive for advertisers — consider the click-through rate (CTR) of a well-received ad — but extremely profitable for publishers.
This is why the CPC model is ideal for driving conversions (whether they are site traffic or sales), whereas the CPM model is useful for advertisers looking to raise brand awareness.
What is the difference between CPM and CPA?
CPA, or cost per action, "refers to a type of pricing model in which marketers pay ad networks or media sources for specific conversions (such as a purchase or registration) that occur within an app following engagement with an ad."
CPM is essentially all about impressions and only impressions, whereas CPA is all about quantifying the number of people who took specific action for the benefit of your ad campaign — after engaging with your ad.