Cost Per Impression (CPM) - Explained
What is CPM?
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Table of ContentsWhat is Cost per Impression?How is CPM Calculated? CPM vs. CPC and CPAAcademic Research on Cost per Impression (CPM)
What is Cost per Impression?
Cost per thousand (CPM) refers to the cost of internet marketing or traditional advertising in which advertisers pay for every time that an advert has been displayed. That is, it means the expense of costs incurred for every thousand potential consumers who have viewed an advertisement. CPM is a way to measure the cost of displaying an advert on the web page. If a CPM is $50, for instance, every time that it is viewed by a thousand customers (thousand times), then the advertiser is charged $50. The term CPM stands for cost per mille (Latin word meaning thousand).
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How is CPM Calculated?
CPM is a common pricing approach applied in web ads. The success of this method is usually click-through rate, which refers to the percentage of people that see and click an advert. For instance, an ad which receives 3 clicks for every 100 impression has a 3% click-through rate (CTR). One cannot measure the success of an advert using CTR alone since an ad that a reader views but fails to click may still have an impact.
CPM vs. CPC and CPA
CPM is one of the pricing methods used in website advertisement. Other models include cost per click and cost per acquisition. Cost per click involves an advertiser paying each time a visitor of a web clicks an ad while cost per acquisition involves an advertiser paying only each time a visitor makes a purchase once he/she clicks an ad.Different pricing methods have varying effectiveness depending on the ad campaign. CPM is considered the most effective for a campaign that is focused on heightening brand awareness or delivering a particular message. In such a case, the CTR does not matter since the exposure of having an advert prominently placed on a high-traffic website aids in the promotion of a company's brand name or message even in the case that visitors don't click on the ad.Companies that do not focus on mass appeal and regard highly the promotion of a product to a particular audience always prefer CPC or CPA advertising methods since they only get to pay when visitors click through their site or purchase the advertised product.Publishers prefer CPM because they get paid just for displaying advertisement. However, the CPM rates are usually low, usually $2.00, and as such requires a website to have robust traffic in order to make decent income.In order to evaluate CPM, website publishers choose popular keywords and monitor the amount of product/service sold during the period of ad pay. Instead of calculating the total cost of the advertising campaign, CPM enables advertising companies to discover if the total costs are paying off or not. It also helps to determine to whether CPM for a particular inclusion needs of a company is working, or whether some other mentioned would be more effective.