How do you calculate CPM?
CPM, or cost per thousand, refers to the cost of a marketing campaign that reaches at least 1000 people. The letter “M” in the term refers to the Roman numeral for 1000.
In order to calculate your CPM, there are a few crucial pieces of information that you need.
- First, you will need to determine how many impressions your ad will receive, or how many times your ad will be viewed. You will also need to determine the price of the ad.
- You will then need to divide your total number of impressions, or ad views, by 1000. For example, if your ad is viewed 30,000 times when you divide that number by 1000, the result is 30.
- You will then need to divide the cost of your ad, determined in the first step, by the number you calculated by dividing your ad views by 1000 in the second step, to end up with your CPM value.
In short, the formula for calculating your CPM is ad cost divided by the result of dividing your impressions by 1000.
If you want to skip the CPM formula, you can always use an online CPM calculator to make the calculations for you.
What is CPM?
Now that you’ve been informed on how to calculate your “cost per 1000 impressions,” it’s important to understand the term CPM in general.
CPM, like its name suggests, allows Internet marketers to obtain a quantitative figure of how much it costs for 1000 impressions. To date, CPM is the most common technique used by marketers to assess the price of a web ad.
What is CPM in advertising?
CPM is an important advertising term in the world of a marketer. CPM in advertising allows you to see how much 1000 advertisement views, or impressions, would cost.
An easy way to understand CPM is by putting it in context. For example, if a website’s CPM charge is $5.00, that means that you, as the advertiser, would be paying that $5.00 every 1000 times your ad was seen.
After all, CPM stands for “cost per thousand impressions”!
You can calculate your CPM with our online CPM calculator or the CPM formula.
If you’re not satisfied with your CPM, TCM ProLeads Marketing can help. We have a team of specialists that can help you create a digital marketing campaign that is both successful and cost-effective. Get a Free Ads Audit and Strategy Consultation Today.
Why is calculating CPM important?
Marketing your business is a crucial part of your success. Without Internet marketing, it’s unlikely that your website will see the traffic it needs to rank well in search engines. It’s a domino effect, and if your website isn’t getting traffic, you’re likely not making many sales either.
When you calculate your CPM, using the CPM formula or our CPM calculator, you’re doing yourself and your business a favor by not only increasing brand awareness, but also measuring the impressions of each of your ad platforms. If you find that you’re not getting as many impressions as you’d expect on a certain platform, you’ll be able to shift your strategy in order to improve that number.
This ultimately results in higher brand awareness and more conversions overall.
CPM gives you valuable insight that can truly shift and shape the course of your marketing campaigns.
Why calculate CPM with an online CPM calculator?
One of the biggest advantages of online campaigns is how easy they are to analyze and measure. With the right data (and tools), it’s easy to see just how far your advertising budget is taking you and the results your campaign is yielding.
If you enter impressions and total budget in our online CPM calculator, you’ll get your CPM instantly.
By calculating CPM, or the price you pay for 1000 ad impressions, you can decide whether or not the amount you’re paying is cost-effective for your business. Low CPM means that your ad is being displayed to Internet users at a relatively low cost, while a high CPM means that you’re paying more per view.
If you enter CPM along with your total budget, you’ll see the number of impressions you’d be able to have with that budget.
Now that you know the impressions, budget, and CPM of your campaign, you can make more informed decisions about your digital marketing strategy. Calculating your CPM with our CPM calculator also made it fast and easy for your team to get all this data.
What is the average CPM on each social platform?
Check out the average CPM advertising cost on each of these platforms in the table below:
|$7.19 per 1000 impressions|
|$7.91 per 1000 impressions|
|YouTube||$9.68 per 1000 impressions|
|$6.59 per 1000 impressions|
|$6.46 per 1000 impressions|
|$30 per 1000 impressions|
What’s the difference between CPC, CPM, and CPA?
Similar to CPM, CPC and CPA also exist and serve as other ways of pricing ads.
- CPC CPC, or cost per click, is very similar to CPM. However, with CPC, you pay for every time someone takes action and clicks on one of your ads. This is extremely useful when you’re promoting an ultra-specific product or service in a niche market.
- CPA CPA, or cost per acquisition, is when the promoter of the ad only has to pay when a purchase is made that can be tracked back to the buyer clicking on the ad that resulted in that purchase.If you’re going to utilize CPC or CPA, it’s important to have a high click-through rate since the goal of the ads is to ultimately have someone purchase the product that you’re advertising.
- CPM With CPM on the other hand, you only pay per 1000 impressions. Impressions essentially refer to how many people see your ad. They don’t have to take action (like clicking the ad) to be considered an impression.Click-through rate is less important with CPM since you’re not as worried about driving conversions as you are increasing brand awareness. This makes CPM rates extremely low and cost-effective.
Should I use CPM, CPA, or CPC?
As with every aspect of marketing, different techniques will be successful depending on the campaign type.
CPM often makes the most sense if your company is driven toward increasing awareness for your brand. It is also extremely helpful when your campaign is aiming to convey a detail-oriented message to your customers. It’s less focused on clicks and can be low in cost, making it great for low budgets.
On the other hand, CPC and CPA stand out as a fantastic choice if you are using digital advertising. If you’re focused on doing more than just making an impression on users and your end goal is a purchase, one of these options is the way to go.
When should you use CPC instead of CPM?
If the CPM of your ad campaign is too high to be worth the investment, or if you just aren’t seeing results, a CPC PPC campaign might be a better option.
With pay-per-click advertising or PPC, you only pay for ads when people actually click on them. That way, if someone sees your ad and isn’t interested, you haven’t lost anything. If you use search engines, you’ve most likely seen PPC ads before.
In Google, for example, they can appear both at the top of the results and in a sidebar next to the results:
So how does Google (along with other search engines) decide who to show these ads to?
When advertisers create PPC campaigns, they choose a set of keywords they want to be listed for. In the example above, all of the ads shown are for businesses that wanted to reach people who searched for “web design.”
All PPC ads are not priced the same, though. The cost for each click is determined by an auction process, and each advertiser has to set a bid for the maximum amount they are willing to pay per click for specific keywords.
This means that broad keywords like “web design,” which a lot of companies will want to compete for, are more expensive than specific ones like “web design companies in central Pennsylvania.” The fewer bidders a keyword has, the less you will pay to advertise in its search results.
For many businesses, PPC allows them to maximize their marketing budget.
CPM stands for ‘Cost Per Mille’; that’s cost per a thousand impressions. One impression is one potential customer viewing an advertisement once. CPM is calculated by dividing the total cost by the number of impressions and multiplying the result with 1000.
Here is the CPM formula:
CPM = (Total cost / Impressions) x 1,000
Don’t forget the last part! If you don’t multiply by a thousand, what you get is the cost of ONE impression. You need to add “x 1,000” to get the cost of A THOUSAND impressions.
For example, if you spend $5,000 for an advertisement and get 250,000 impressions, the CPM of that campaign is $20.
If you need to work out the total cost from the known CPM price and impressions, use the following formula.
Total cost = (Impressions x CPM) / 1,000
If you want to estimate the number of impressions you can get from the known CPM rate and the given budget amount, use the below formula.
Impressions = (Total cost x 1,000) / CPM
Ready to improve your CPM?
Although it can take some trial and error to figure out which keywords work best for your site, PPC can be a much more cost-effective pricing model for your digital advertising efforts than CPM.
TCM ProLeads McHale Digital Marketing Agency offers a variety of PPC campaign plans to fit any budget. Our customized campaigns vary in PPC spend, number of keywords, and setup fees, and there is always room for customization.
If you’re interested in learning more about PPC, or want help setting up a campaign, feel free to contact us! We’re more than happy to help you start maximizing your Internet marketing potential.
Ready to start improving your CPM? Get Free Online Consultation today to learn more about how TCM ProLeads Marketing team can help with your online advertising challenges.