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What is CPM ?

CPM is an advertising term that stands for Cost Per Mille (thousand impressions). It’s also a payment model that denotes advertisers paying a set cost per thousand impressions. Unlike other payment models that charge for actions like clicks, CPM is calculated on the basis of views.

Even though it’s primarily an online marketing metric, it’s also used as a benchmarking metric in radio, television, newspaper and other forms of advertising to calculate the cost of a campaign.

CPM is one of the most common web ads payment models. When advertisers want to assess the success of their campaign, they also monitor CTR (click-through rate) to compare how many people viewed the ad and how many clicked on it. If only CTR was measured, it wouldn’t properly measure the impact of a campaign as viewers may still be influenced by viewing the ad.

CPM is best used for brand awareness campaigns, as it amplifies a company’s brand or a specific message. If viewers aren’t required by the campaign objectives to take actions, CPM is a good choice for advertisers.

It’s important to denote that if the ad is placed on two locations on the same page, advertise are paying for two impressions instead of just one.

The formula for CPM is

CPM = CPM rate x CPM units.

 

 

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    Ad Inventory or Advertising Inventory is a term that describes the advertising space that each publisher has, and which advertisers can buy to host their ads.
  • Bid Rate
    Bid Rate is a Programmatic Auction metric that shows how many Bids are occurring in the Auction. The frequency cap and one's bid price are commonly used to determine this. The advertiser will only pay for gained impressions.
  • Cost Per Action
    Cost Per Action or CPA is an advertising term used to define how advertisers pay for served ads. The cost per action (CPA) is computed by dividing the cost by the number of activities being measured.
  • Cost Per Click
    CPC or Cost Per Click is a payment model where advertisers pay every time a user clicks on an ad, regardless of the number of impressions. The cost per click bidding mechanism decides how much advertisers pay for their advertisements.
  • Cost Per Engagement
    Cost Per Engagement model means that an ad is paid only when it’s engaged with, as opposed to other payment models such as CPC and CPM. CPE is a pricing model for advertising in which digital marketing teams and advertisers only pay for ads when consumers interact with their campaign in some way.


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