The cost per mille (CPM) is a widely used pricing model in the advertising industry, wherein advertisers pay a fixed amount for every 1,000 impressions of their ads. The term “mille” is derived from the Latin word for 1,000. This model is commonly utilized by advertisers to determine the cost-effectiveness of their campaigns and is an important metric in programmatic advertising.
In the realm of programmatic advertising, digital ad inventory can be procured and sold automatically. CPM is most advantageous for larger publishers, as advertisers pay a predetermined fee based on the number of impressions an ad placement generates, usually monthly or quarterly.
To determine the CPM for an app’s ad campaign, essential data such as the total cost of the campaign and the total number of ad impressions generated must be available. To compute the CPM, divide the total campaign cost by the number of impressions and then multiply the result by 1,000, which produces the CPM rate.
To illustrate a CPM calculation, consider a hypothetical example where an ad campaign costs $800 and generates 10,000 impressions. In this scenario, the CPM for the ad would be $80.
($800 / 10,000 impressions) * 1,000 = $80
Calculating CPM is a crucial aspect of digital advertising as it allows advertisers to compare the costs of various ad campaigns across different platforms and publishers. By analyzing CPM rates, advertisers can make informed decisions about their ad placements and maximize the efficiency of their ad spend.
CPM, or cost per mille, is a pricing model used in marketing and advertising for campaigns that aim to increase brand exposure and awareness. With CPM campaigns, advertisers pay for ad impressions to maximize the number of people who see their ads. This is in contrast to performance marketing campaigns that require payment only upon completion of specific actions.
For instance, in a cost-per-completed-view pricing model, advertisers don’t pay until a video ad is watched in its entirety, while in a cost-per-engagement model, an action beyond the initial impression is required. CPM campaigns are ideal for creating and elevating brand awareness before a more conversion-oriented campaign, even though they’re challenging to measure in terms of performance.
Although CPM campaigns don’t demand user engagement with the ad, their effectiveness can be determined by evaluating CTR (click-through rate), which is the ratio of clicks an ad receives compared to overall impressions. Therefore, marketers can get a general understanding of how well their ad resonated with users.
In the world of programmatic advertising, CPM is a pricing model used by advertisers, while eCPM serves as a revenue indicator for app developers. While both metrics relate to the cost of 1,000 impressions, CPM exclusively refers to the amount an advertiser will pay for 1,000 ad impressions. Typically, CPM is used in the context of brand awareness campaigns that don’t have specific performance goals. Advertisers pay for a specific number of impressions, and the focus is on generating exposure.
In contrast, eCPM, also known as effective CPM, measures the revenue an app developer generates from displaying 1,000 ad impressions to their users. This metric takes into account both ad impressions and their associated earnings. Earnings can come from clicks, ad views, or other types of engagement with the ad. For app developers, eCPM is a key indicator of how well they are monetizing their app’s user base.