What is Cost Per Mille (CPM)?

Cost Per Mille, frequently abbreviated as CPM, is the price an advertiser pays for one thousand impressions for their digital advertisement. In essence, it's a benchmarking tool that helps advertisers measure how much they are spending to have their ad seen by thousands of potential customers

Some of its salient features include

- CPM is a key metric in evaluating the cost-effectiveness of various advertising channels

- Understanding CPM is critical for advertisers aiming to optimize their ad spend and maximize reach.

The Calculations Behind CPM

Calculating Cost Per Mille is simple. You divide the total cost of the advertising campaign by the number of impressions ( in thousands). For instance, if a campaign costs $200 and garners 50,000 impressions, the CPM would be $4.

CPM = Total Ad Spend / total Impressions served in thousands 

Important note

An impression is different from a view. Today, an impression is counted when the ad is delivered to the user's device. The ads need not be viewed to be qualified as an impression. 

An impression becomes a view when at least 50% of the ad is seen for at least 1 second. So, CPM is different from CPV(Cost per View) or Cost per viewable impression as it is generally called.  

Role of CPM in Digital Marketing Strategies

Cost Per Mille(CPM) is an invaluable metric within broader digital marketing strategies, offering insights that guide budget allocation and channel selection.

Different platform works in different pricing models. For example, Google search works on the CPC (cost per click) model, where you only pay when the ad is clicked. Affiliate platforms work on a cost-per-action (CPA), where you only pay when the final action is achieved.

In this case, Cost per mile plays an important role in comparing the normalized the return on investment(ROI) calculation. 

CPM(Cost per Mille) for Various Platforms

Different Platforms have Cost Per Mille because of the differences in 

• Audience engagement

• Targeting capabilities and 

• Content formats

For example, Cost Per Mille YouTube rates may differ significantly from those on other social media platforms or display networks because of the platform's specific user interaction and content consumption patterns.

Even in Youtube, Cost Per Mille(CPM) vary by country. For example according to ecocnn, youtube CPM of Norway is the highest in the world. Youtube CPMs of top countries for 2023 are as below

Maximizing ROI with Cost Per Mille Ads

To maximize return on investment (ROI) with Cost Per Mille ads, advertisers should:

• Optimize ad creative to increase engagement and thus drive down the effective CPM

• Use targeting options to ensure ads are seen by the most relevant audience, which can lead to better campaign performance and potentially lower CPM costs.

• Monitor and compare CPM trends across different campaigns and platforms to allocate budgets more effectively.