Understanding Cost Per Impression (CPM) in Online Advertising
Are you interested in learning more about the costs of online advertising? In the digital advertising market, cost per impression (CPM) is a critical metric. In this piece, we’ll define CPM and explain why it’s critical for marketers and publishers to grasp.
What is CPM?
CPM stands for cost per impression. An impression is counted each time an ad is show on a website or app. CPM is the cost that an advertiser pays for every 1,000 impressions of their ad.
For example, if an advertiser pays $2 CPM, they will pay $2 for every 1,000 impressions of their ad. If their ad is displayed 10,000 times, they will pay $20.
Why is CPM important?
CPM is an important indicator for both marketers and publishers. CPM assists advertisers in determining the cost of reaching a given audience. It enables them to compare the costs of advertising on other platforms and assess the efficacy of their advertising efforts.
CPM is crucial for publishers because it defines how much revenue they can get from having ads on their website or app. A publisher with a high CPM can make more money for each impression of an ad displayed.
How is CPM calculated?
CPM is calculated by dividing the total cost of the advertising campaign by the number of impressions generated. The result is then multiplied by 1,000 to get the CPM.
For example, if an advertiser spends $2,000 on a campaign that generates 1 million impressions, the CPM would be calculated as follows:
CPM = ($2,000 / 1.000.000) x 1,000 CPM = $2
In this example, the advertiser is paying $2 for every 1,000 impressions of their ad.
In the online advertising market, cost per impression (CPM) is an essential measure. It assists marketers and publishers in understanding the costs and revenues connected with displaying advertisements. Advertisers may measure the efficacy of their advertising campaigns and publishers can manage their ad inventory to maximize revenue by studying CPM.