What is Cost Per Mille (CPM)?
Cost Per Mille (CPM) is a digital advertising metric that represents the cost an advertiser pays for 1,000 impressions of their ad. The term "mille" is derived from Latin, meaning "thousand."
CPM is primarily used in display advertising, video advertising, and other formats where impressions (views) are the primary performance indicator.
Unlike performance-based metrics like CPC (Cost Per Click), CPM focuses solely on how many times an ad is displayed, regardless of user interaction.
How does cost per mille (CPM) work?
In CPM-based advertising, advertisers agree to pay a fixed rate for every 1,000 impressions their ad receives. The calculation is straightforward:
CPM = (Total Cost ÷ Total Impressions) × 1,000
For example, if an advertiser spends $500 and their ad receives 100,000 impressions, the CPM would be $5. This system makes CPM an accessible model for campaigns focused on brand awareness rather than direct conversions.
What is cost per mille (CPM) used for?
CPM is widely used in campaigns where the goal is to increase brand visibility or reach a large audience. It’s effective in:
- Brand awareness campaigns: Ensuring the ad reaches as many people as possible.
- Video advertising: Platforms like YouTube often use CPM to measure campaign performance.
- Programmatic advertising: Automated ad buying often relies on CPM as a bidding metric.
It’s especially beneficial for businesses that prioritize gaining exposure over immediate user actions like clicks or purchases.
Examples of cost per mille (CPM) usage.
- Display Advertising: A clothing brand runs a display ad campaign on a major news website with a CPM of $10. If the campaign generates 50,000 impressions, the brand will pay $500.
- Video Pre-roll Ads: A gaming company buys pre-roll video ads on YouTube with a CPM of $20. For every 1,000 views of the video, they pay $20.
- Programmatic Ads: An iGaming platform uses a programmatic ad network with a CPM bid strategy to target users across sports websites during a major championship event.
Advantages of using cost per mille (CPM).
- Scalable reach: CPM ensures widespread visibility, making it ideal for large-scale awareness campaigns.
- Predictable costs: Advertisers can calculate their budget more easily based on impressions.
- Top-funnel marketing: Perfect for campaigns aimed at increasing recognition rather than immediate conversions.
- Supports programmatic efficiency: CPM-based bidding integrates seamlessly with programmatic ad platforms.
Tips for using cost per mille (CPM).
For iGaming brands:
- Target strategically: Use advanced targeting options to ensure impressions come from high-value users within your demographic, such as sports enthusiasts or casino players.
- A/B test creatives: Experiment with multiple ad designs and messages to understand what resonates most with your audience for higher engagement.
- Leverage programmatic tools: Pair CPM campaigns with programmatic platforms to automate placements and optimize performance in real time.
- Analyze performance beyond impressions: While CPM focuses on visibility, track secondary metrics like CTR (Click-Through Rate) and post-view conversions to measure effectiveness.