Before you start working with online ads, it's important that you understand CPM (cost per mille). Cost per mille is a great way of seeing whether the cost you're paying for advertising is worth the results the ad is producing. But what is CPM anyway and what makes a good CPM rate?
It is an important metric for understanding the effectiveness of your marketing campaign. For publishers the CPM lets them know how much advertisers are willing to pay for their inventory. A high CPM will indicate to a publisher that their content is valuable. Advertising budgets are spend at different times throughout the year and this can have a large impact on CPM, often they increase around the holidays due to increased consumer spending on gifts. Seasonality does affect CPM by it also depends on an advertisers ability to craft the right message with the right targeting.
CPM Formula
Cost per mille for your campaign can be calculated by dividing the total number of impressions by the total cost or total budget if the project is still in the planning stages.
CPM = Total Cost ÷ Number of Impressions X 1000
What Is CPM (Cost Per Mille) Exactly?
When you run an ad online, it will gather impressions. An impression is simply the number of times this ad gets shown across the web.
So, if an ad were to appear on a website 1,000 times, that ad would then have 1,000 impressions. Keep in mind that this does not mean that 1,000 people see the ad. In fact, only a small number of people, perhaps a few hundred, may see the ad even though the ad is being loaded a thousand times or more. Viewability will determine how many of those impressions are seen.
Whatever the case, CPM aims to put a value on 1,000 impressions for a certain ad. All ads have different values per thousand impressions. The variation in cost depends on a variety of things, most notably upon what industry your business is in.
For example, businesses in different industries may have to pay more to run an ad compared to those in other industries. It mainly depends on how popular the industry is. For example, the fashion industry is much more popular than the industrial market.
Marketers who advertise on Google, LinkedIn, Youtube, Facebook will very often use CPM as one of a few metrics that let them know how effective their PPC campaigns are. On its own it is less useful because an advertiser may have a high CPM but this is balanced out by also having a high click ratio. Different keywords and websites have different CPM's and it a marketers job to determine how to spend their budget wisely. Online marketers will often use CPM in conjunction with Cost Per Action (CPA) to give a more holistic view on how the campaign is performing. Often the action an advertiser will be optimising for will be email sign-ups, a purchase, registers or calls.
How Much Do You Need to Pay?
The concept of CPM is very simple. For example, if you as the advertiser are paying $1 CPM for an ad, this means that you will only pay $1 every time that ad gets 1,000 impressions. The amount of money you'll actually pay per thousand impressions may also vary according to what price the website owner wants.
To advertise on a website owner's site, you might pay as little as a few cents per 1,000 impressions or you might have to pay several dollars. You might be wondering what the word "mille" means, but it simply is the word for "thousand" in Latin.
CPM is perhaps the most popular way of valuing ads in the world of digital marketing. While there are other advertising methods such as cost per acquisition or cost per engagement, cost per mille remains one of the simplest and most affordable ways to put a value on a certain number of ad impressions.
Again, keep in mind that CPM only measures the number of impressions an ad gets and not the number of times that online users click on that ad.
So, you can only measure how many times the ad gets shown rather than how successful that ad is in terms of user engagement. While this is a downside for CPM ads, CPM ads can still be very helpful for monitoring the success of your ad campaign and your business.
After all, CPM can help you budget better and determine how much you might end up spending if you plan on showing an ad (or multiple ads) for a given period of time.
Why Does Cost Per Mille Advertising Matter So Much for Your Business?
You might wonder what makes CPM so special compared to another method of measuring an ad's success. For example, many people favor another method known as the click through rate (CTR). The CTR measures how many people click on an ad relative to the number of times the ad gets shown.
Of course, if the ad is only shown a few times and many people click on that ad to explore your website, that ad would be quite a success. By knowing how many people click on the ad and go to your website, you would know that your website is getting a large influx of people and perhaps even new potential customers.
Cost per click (CPC) is another ad valuing method in which an advertiser will only pay for the ad if an online viewer actually clicks on the ad.
This, of course, is different than CPM, which requires the advertiser to pay only after a certain number of impressions get reached. So, why would you prefer to use CPM instead of CTP, CPC, or any other method?
Why Use CPM Ads in the First Place?
While it is true that CPM does not measure how many times an ad gets clicked on, its method of measuring and valuing impressions can still be quite valuable. The reason why you would use any of these advertising methods is that you need a certain approach to your business and an understanding of the analytics for your business and advertising campaign.
For example, some people might only care about measuring how many times people click on their ads and go to their websites. On the other hand, some people might care more about how often their ad gets shown on a website or various websites. At the end of the day, it all depends on what you're looking to gain from your ad campaign.
If you want to learn more about how your ads work when placed on different websites and if you want to increase your business's brand awareness, it might be a good idea to opt for CPM ads. But what kind of results can you expect to see once you start using CPM ads?
What Is a Good Result From CPM Advertising?
If you're advertising in the CPM fashion, you of course want to make sure that you're getting a good CPM rate compared to your CPM stats. The good thing about cost per mille advertising is that you don't have to worry too much about the rates because, in general, CPM advertising is quite cheap compared to other advertising methods.
You will find that many website owners won't charge much more than $2 per thousand impressions for a single ad. This isn't very much at all and it will give you the chance to see how effective the ad is on a particular website.
This is important because some websites are much more popular than others and if you decide to advertise on a popular website, you can expect your ad to get a thousand impressions quite quickly.
More than that, an ad on a popular website will get seen more often by real internet users. The more people see your ad, the more people will be likely to click on that ad and go to your website. This result, of course, is ideal, because it gives you the chance to rake in more traffic and more potential customers.
Even if you advertise on a website that isn't all that popular, you can still reap the benefits of CPM advertising. This is especially true if you plan on measuring your brand awareness. Brand awareness is all about getting more people aware of your website so that more people know that it exists.
The Benefits of CPM Advertising
Even if people don't click on your ads right away, the power of brand awareness might influence those people to go to your site at a later point in time. Whatever the case, CPM advertising is very helpful for boosting brand awareness. After all, showing your ads thousands of times will effortlessly get the name of your brand out there.
The more times you expose your brand to large groups of people, the more likely it will be for the name of your brand to stick in people's minds. Social media CPM advertising is especially helpful for those who want to see more dramatic results. This is because social media platforms such as Instagram or Twitter are ridiculously popular compared to most websites.
So, you can rake in the impressions by the thousands in a relatively short period of time if you decide to advertise on social media platforms. This not only helps with brand awareness but it might even bring in some new customers as well. However, there is a downside to this form of CPM advertising: advertising on social media platforms tends to be quite expensive.
You might have to pay $5 or $6 (if not more) for every thousand impressions. This, of course, can quickly add up if you're not paying close attention. But even so, you will find that advertising in this way can be very effective for the success of your ad campaign and your business.
How to Achieve a Better Result With CPM Advertising
One of the best ways you can increase your CPM rate is to make sure that you're covering all the major ad formats. Ads come in many shapes and sizes and they may appear in different places on the internet. For example, banner ads tend to appear on the top or sides of websites.
On the other hand, video ads, obviously, appear on videos. There are also pop-up ads that tend to appear when a user clicks on a webpage. Whatever the case, all of these ad variations are effective in their own rights, but some are more effective than others for certain groups of people.
A good plan of action is to branch out and make sure that you're covering all sorts of ads. For example, if you're only advertising with banner ads, that means that there are thousands upon thousands of people that you're missing who are watching videos but are not seeing your video ads.
To fix the problem, you'll have to expand into new advertising territory and ensure that your ads get seen by all sorts of people.
But that isn't the only way you can increase your CPM rate.
Other Examples
You should also make sure that your ads are getting shown on high-quality websites. There are all sorts of websites on the internet and some are far more reputable than others.
Of course, if you care about your business's reputation, the last thing you want is to show your ads on websites that have a bad reputation or that don't provide truthful or high-quality information. If you do this, online users might think that your website is just as low-quality as the website the ads are on.
It can be tricky to figure this out at first, but you'll find that the results are worth it. That way, you'll know that the money you're spending on advertising will be put to good use.
What You Need to Know About CPM
CPM (cost per mille) advertising is one of the most popular ways of advertising on the internet. It puts value on every thousand impressions an ad gets. By understanding how CPM ads work, you can not only plan ahead and budget your ad spending, but you can also use the ads to increase your brand awareness and bring more people to your site.
To learn more about these advertising options, don't hesitate to contact us here.