CPM (Cost Per Thousand Impressions)

CPM is a digital advertising metric that measures the cost of an advertisement for every thousand impressions. It is a key performance indicator (KPI) used to track the cost-effectiveness of advertising campaigns.

Formula:

CPM = Cost per thousand impressions = Total cost / Number of thousand impressions

Explanation:

• Cost: The total amount spent on the advertising campaign.
• Impressions: The number of times an ad is displayed on a screen.
• Thousand impressions: A group of 1,000 impressions.

Interpretation:

The CPM is an important metric because it allows advertisers to compare the cost-effectiveness of different ad campaigns and channels. A low CPM indicates that the ad campaign is very cost-effective, while a high CPM indicates that the campaign is not as cost-effective.

Factors Affecting CPM:

• Ad format: Different ad formats, such as banner ads, display ads, and video ads, have different CPMs.
• Targeting: The targeting of the ad campaign can affect the CPM.
• Audience: The demographics and interests of the target audience can affect the CPM.
• Competition: The amount of competition for ad space can affect the CPM.

Examples:

• If an advertiser spends $10,000 on a campaign and gets 20,000 impressions, the CPM would be $10,000 / 20,000 = $0.50.
• If an advertiser spends $20,000 on a campaign and gets 40,000 impressions, the CPM would be $20,000 / 40,000 = $0.50.

Notes:

• CPM is a metric used primarily in online advertising.
• CPM is usually quoted in cents or dollars.
• CPM is a key performance indicator for display advertising, not search advertising.