CPM (Cost Per Thousand)

What does CPM mean? 

In digital marketing, CPM or Cost Per Mille means the amount an advertiser pays for 1000 impressions of their ad on a webpage. When an ad is loaded on a webpage and is ready to be viewed by a visitor, it counts as one impression. To calculate CPM, you divide the total cost of the advertising campaign with the number of impressions it garners. 

A good CPM is more about quality than quantity. Impressions should turn into conversions, exceed your campaign goals and net a profit. If you invest a lot in a campaign and it garners many impressions that don’t eventually convert, the CPM is low but not good. Conversely, a pricier CPM that leads to conversions can be a winner. After the definition of CPM, let’s talk about the pros and cons of using CPM as a pricing model for advertising campaigns. 

Pros and cons of using CPM in advertising 

Pros: 

• Brand exposure: Since you’re paying for impressions, you put your brand in front of diverse audiences, enhancing brand awareness. 
• Budget-friendly: Compared to other pricing models like PPC (pay per click), CPM emerges as a budget-friendly option.  
• Predictable budgeting: With CPM, advertisers know exactly how much they pay per 1000 displays, simplifying budget planning. 

Cons:  

• No conversion guarantee: Though you’re paying for impressions, there’s no guarantee of clicks, conversions, etc. 
• Ad blindness: Frequent exposure to the same ad can cause ad fatigue in users. 
• Imprecise targeting: There’s no room for targeting specific user segments based on demographics or interests.