CPM is an online advertising term that refers to a company’s cost per 1,000 impressions. It is used to measure the cost of advertising vehicles and for cost control, especially for new businesses. It can be associated with other marketing methods, such as cost-per-click advertising.
Cost per mille (CPM) is an online marketing element that refers to a company’s advertising cost per 1,000 impressions. This term is most often used in print advertising, where the company’s banner is displayed on a website and the company is charged for every 1,000 ad impressions or views. CPM in online advertising is also used to measure the cost of other advertising vehicles so that the company knows the most effective keywords to bid on. Another role of CPM in online advertising is cost control, especially with new businesses, so the business doesn’t overspend its advertising budget.
CPM in online advertising is a term most often used in impression marketing, where a business requests an advertising hub or individual website to display the company’s banner. For example, if a website says that businesses can market it for $5 CPM, the website is saying that the business will have its ad displayed 1,000 times for $5. it costs $0.005 and gives the business a much better understanding of what they are spending. It is estimated that around 1% of all online users react to an ad, which makes 1,000 a good number for business analysts to work with.
While CPM in online advertising is often associated with impression marketing, it can also be associated with other marketing methods, so businesses know how much they are spending. In cost-per-click (CPC) advertising, the business pays for clicks on ads; this tells the company what they are spending per click, but it is unrealistic to think that every user will click on the ad. Analysts often measure how often an ad is clicked on and companies use this to bid on the most effective keyword. If an ad costs $2.00 per click and it is estimated to be clicked 20 times out of 1,000, the CPM will be $40.
One of the main functions of CPM in online advertising is cost control, especially for new businesses. If an online business has a small marketing budget, they can’t spend the money unless they see results and only buy thousands of impressions. By only buying a few thousand and not running the ad constantly, the business will be able to reach many potential customers without going over budget. This also allows the company to calculate and plan online advertising costs.
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