What is CPM?
CPM is the most common web advertisement technique used by marketers nowadays. CPM is referred to as Cost Per Mile. It is also called Cost Per Thousand. It is a term used in marketing and advertising especially in Digital Marketing. CPM states the cost which an advertiser pays upon per thousand impressions of his/her ad. Besides, it is also helpful in measuring the success of an advertising campaign. In CPM, the publisher can generate revenue based on 1000 impressions per ad.
One impression means one user which is seeing the ad. Normally CPM rate is set by the marketing authority and is very helpful in calculating the total cost of an ad campaign. CPM Calculator tool used by the marketers nowadays. Most advertisers and publishers use it nowadays in order to calculate CPM. It allows the advertiser to calculate how much their ad will cost if it reach 1000 views. Such as in the case of Google, if someone places an ad on Google using Google AdWords and it is referred to the owner of some particular site using Google AdSense. In such a case it will be Google who will decide CPM.
Basically CPM is calculated by dividing the cost of an advertisement placed by the impressions it receives (usually in thousands). CPM is very helpful in determining the overall cost of an advertising program.
The Objective of CPM
The CPM is calculated with an objective to measure the cost of different advertising campaigns across multi-media. The CPM is highly effective in planning the new campaigns as well as the revision of the past campaigns.
CPM promotes product awareness and also improves brand awareness among the customers whether they purchase a product or not. Most businesses just want to improve brand awareness and their main goal is just to expose the ads to as many public as they can. CPM is cost effective in such circumstances. Besides, CPM also has wide importance in PPC Campaigns that are used to drive the traffic to the website. As soon as the visitor clicks on the ad, it will take the user to the relevant website or landing page.
Google AdWords and AdSense take both CPC and CPM in the account and allows the advertiser as well as publisher to make revenue based using both CPC and CPM. However, in CPC revenue is generated when a user clicks on the ad, whereas in CPM revenue is generated when a particular ad goes through some eyes. The success of the marketing campaign can also be calculated by the term known as Revenue Per Mile (RPM).
How CPM Works?
In online advertising, an ad is placed on the relevant website. Normally advertisers pay the publishers based on the number of impressions or the number of clicks.
Example of CPM
As mentioned above CPM is calculated based on the following formula.
Cost of an Advertisement ($)/Number of Impressions generated.
Let’s take an example
Total cost spend on the promotion of ad is $10,000
The number of audience it reaches is 200,000
CPM in this case is ($0.05×1000) =50$.
Therefore, the CPM in this case is 50$. It is to be cleared that 50$ is the CPM not 0.05$ because CPM means the Cost Per Mile (1Mile=1000). Let’s take another instance if the CPM of a website is $5. It means that it will take 5$ to reach the ad to a thousand peoples. In online advertising, if a banner has CPM of 20$. It means that it will take 20$ to showcase the banner to 1000 users.
Why CPM Calculator?
The CPM Calculator works in a very simple way. You just have to select one from cost, impressions, and CPM. In the next box enter the number of impressions, while at the end enter the CPM on an ad. The tool in an instant will provide you with the exact CPM.
The CPM Calculator allows you to calculate how much you can invest in your ad. Both advertisers and publishers are taking advantage of this tool.
Advertisers use it in order to plan their marketing strategy i.e. how much it will cost to reach the ad to 1000 views. While Publishers use it as a gauge, how much they can earn if the ad reaches 1000 peoples. In this way they can better drive more traffic to their website thus making an increment in their conversions as well as revenue.
Difference between CPM and CPC, CPA
CPM is one of the several factors used to calculate the price of website ads. While CPC is also one of the methods which means Cost Per Click. Whereas CPM means the Cost Per Mile (Thousands) i.e. how much it will take to reach the ad to a thousand views.
Whereas CPC means the Cost Per Click. In CPC advertisers pay to the publishers when an ad is clicked, unlike the CPM in which the payment is made based on the number of views.
Different pricing models are used for different types of ads. CPM improves brand awareness and helps to deliver a specific message. CTR matters less in CPM, because in CPM the advertisement is done with an objective to outreach the ad as many people as can.
In CPM the main objective of an advertiser is to deliver a specific message while the click is not essential in this case. Whereas in CPC, advertisers want the customers to click on the ad later they will land the user to the website where a customer can purchase something.
We have discussed CPM in detail and also recommends you the best tool to calculate CPM. CPM Calculator of calculators.tech is one of the best in the market as it allows you to make wise marketing decisions. The tool is tested and trusted.