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What is CPM and how to calculate?

CPM is an acronym that every person who deals with SEO Marketing should know. This popular term is primarily associated with planning an advertising campaign. If we want to move much more freely in the world of online promotion, it is worth finding out what the above-mentioned slogan hides. We will try to explain it in the following article!

CPM – what is it?

CPM stands for Cost Per Mille. The word mille from Latin means the number one thousand. In this case, we are talking about the cost of reaching a thousand recipients. This indicator is calculated on the basis of the number of visits to our website.

We can put ourselves in a situation that we decide to buy CPM for $ 100, in which case the cost of reaching 1000 recipients will be exactly $ 100. The same analogy applies to any amount of money, so you don’t need to go to more detailed translations. CPM is a payment model for displaying ads on websites. The fee is charged once every thousand impressions. Which in relation to the definition above should be easy to understand.

>> CPC – what is it? <<

CPM marketing – why you should be interested

CPM is implemented mainly to be able to compare the costs of advertising campaigns without major problems. This indicator will allow us to get acquainted with the situation prevailing in various media, thanks to which we will obtain information about the medium that may be the most profitable for us.

If we want to calculate CPM, all we have to do is divide the campaign costs by the number of impressions. CPM in this case is the cost of the media campaign in relation to generating ads and impressions.

How to calculate CPM?

Calculating CPM can prove to be a difficult procedure for people who are just starting their adventure with internet marketing. As mentioned before – before measuring, you should determine the exact results of previous campaigns and the suspected number of views for the future. We must further divide this result into costs.

The CPM formula may seem complicated, but it is actually extremely simple to understand. We need to divide the cost of the ad by the generated impressions. We can assume that our ad serving cost is twenty thousand dollars and the number of generated impressions is five hundred thousand. Now it remains for us to divide both results. After performing the actions, we get 0.04. The last step will be to multiply by a thousand (the number of impressions referred to in the CPM definition) and you will then get $ 4. The result obtained is our CPM cost.

If we already know how much we can spend on CPM, it is worth paying attention to the prices that may seem unclear at first! If a site is selling ad space for $ 20, the CPM cost is just $ 20.

>> CPA – what is it? <<

What are the advantages of CPM?

At the very beginning it should be mentioned that CPM can be considered as a measurable method. This indicator is also popular with publishers because they receive payment for thousands of impressions, and not for specific activities or obligations. Nevertheless, it should be emphasized that CPM will be the most profitable for websites that have been very popular so far, because ads will easily be able to reach a large group of users due to high traffic on the site.

Cons of CPM

Cost Per Mile will not always be of benefit to advertisers. Why? A person interested in placing an advertisement will pay the publishers only for the views. We cannot require any other action. For this reason, CPM can very often turn out to be an unprofitable form of allocating funds for the promotion of our business.

As you can see, CPM is quite a risky indicator which is mostly the best choice for publishers due to the small amount of work required. Nevertheless, we believe that it is worth investing some money in Cost Per Mile to be able to see if this form will work on our website.

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