Cost per mille (CPM), also called cost per thousand (CPT) (in Latin, French and Italian, mille means one thousand), is a commonly-used measurement in advertising. It is the cost an advertiser pays for one thousand views or impressions of an advertisement. [1] Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of exposing the ad to one thousand viewers or listeners. It is used in marketing as a benchmarking metric to calculate the relative cost of an advertising campaign or an ad message in a given medium. [2] [3]
The "cost per thousand advertising impressions" metric (CPM) is calculated by dividing the cost of an advertising placement by the number of impressions (expressed in thousands) that it generates. CPM is useful for comparing the relative efficiency of various advertising opportunities or media and in evaluating the overall costs of advertising campaigns. [4]
For media without countable views, CPM reflects the cost per 1000 estimated views of the ad. This traditional form of measuring advertising cost can also be used in tandem with performance based models such as percentage of sale, or cost per acquisition (CPA).
The purpose of the CPM metric is to compare the costs of advertising campaigns within and across different media. A typical advertising campaign might try to reach potential consumers in multiple locations and through various media. The cost per thousand impressions (CPM) metric enables marketers to make cost comparisons between these media, both at the planning stage and during reviews of past campaigns. [4]
Marketers calculate CPM by dividing advertising campaign costs by the number of impressions (or opportunities-to-see) that are delivered by each part of the campaign. Thus, CPM is the cost of a media campaign, relative to its success in generating impressions to see. As the impression counts are generally sizeable, marketers customarily work with the CPM impressions. Dividing by 1,000 is an industry-standard. [4]
Similarly, revenue can be expressed in terms of Revenue per mille (RPM). [5]
In email marketing, CPM (cost per mille) refers to the cost of sending a thousand email messages. Also referred to as CPT (cost per thousand), this pricing method is used by email service providers (ESPs) to cover the cost of the mail server, bandwidth, hosting images, deliverability services, and bounce management.
There is other types of CPM and one of is vCPM (Viewable CPM). With viewable CPM, you bid on 1,000 viewable impressions and you pay for impressions that are measured as viewable. Viewable CPM lets you bid on the actual value of your ad appearing in a viewable position on a given placement. Using a higher vCPM bid than your CPM bid is usually more effective for winning these more valuable types of impressions.
To calculate CPM, marketers first state the results of a media campaign (gross impressions). Second, they divide that result into the relevant media cost:
For example:
Note: Notice how the CPM is $6.25 and not $0.00625, this is because we are looking at cost per thousand.
The Search Engine Marketing Professionals Organization (SEMPO) defines eCPM as:
In internet marketing, effective cost per mille is used to measure the effectiveness of a publisher's inventory being sold (by the publisher) via a CPA, CPC, or Cost per time basis. In other words, the eCPM tells the publisher what they would have received if they sold the advertising inventory on a CPM basis (instead of a CPA, CPC, or Cost per time). This information can be used to compare revenue across channels that may have widely varying traffic—by figuring the earnings per thousand impressions.
Example
This shows that:
CPP is the cost of an advertising campaign, relative to the rating points delivered. In a manner similar to CPM, cost per point measures the cost per rating point for an advertising campaign by dividing the cost of the advertising by the rating points delivered. [4]
The American Marketing Association defines cost-per-rating-point (CPR or CPRP) as:
Cost per impression (CPI) and cost per thousand impressions (CPM) are terms used in traditional advertising media selection, as well as online advertising and marketing related to web traffic. They refer to the cost of traditional advertising or internet marketing or email advertising campaigns, where advertisers pay each time an ad is displayed. CPI is the cost or expense incurred for each potential customer who views the advertisement(s), while CPM refers to the cost or expense incurred for every thousand potential customers who view the advertisement(s). CPM is an initialism for cost per mille, with mille being Latin for thousand.
Pay-per-click (PPC) is an internet advertising model used to drive traffic to websites, in which an advertiser pays a publisher when the ad is clicked.
An online advertising network or ad network is a company that connects advertisers to websites that want to host advertisements. The key function of an ad network is an aggregation of ad supply from publishers and matching it with the advertiser's demand. The phrase "ad network" by itself is media-neutral in the sense that there can be a "Television Ad Network" or a "Print Ad Network", but is increasingly used to mean "online ad network" as the effect of aggregation of publisher ad space and sale to advertisers is most commonly seen in the online space. The fundamental difference between traditional media ad networks and online ad networks is that online ad networks use a central ad server to deliver advertisements to consumers, which enables targeting, tracking and reporting of impressions in ways not possible with analog media alternatives.
Cost per action (CPA), also sometimes misconstrued in marketing environments as cost per acquisition, is an online advertising measurement and pricing model referring to a specified action, for example, a sale, click, or form submit.
In advertising, a gross rating point (GRP) measures the size of an audience that an advertisement impacts. GRPs help answer how often "must someone see it before they can readily recall it" and "how many times" does it take before the desired outcome occurs.
Click-through rate (CTR) is the ratio of clicks on a specific link to the number of times a page, email, or advertisement is shown. It is commonly used to measure the success of an online advertising campaign for a particular website, as well as the effectiveness of email campaigns.
In web analytics and website management, a pageview or page view, abbreviated in business to PV and occasionally called page impression, is a request to load a single HTML file of an Internet site. On the World Wide Web, a page request would result from a web surfer clicking on a link on another page pointing to the page in question.
Value Per Action (VPA) refers to an online marketing business model similar to the Cost Per Action (CPA) model. While Cost Per Action provides a low risk arrangement in which the seller only pays an advertising fee when a consumer takes action Value Per Action extends that model to add revenue sharing with the consumer.
In Internet marketing, search advertising is a method of placing online advertisements on web pages that show results from search engine queries. Through the same search-engine advertising services, ads can also be placed on Web pages with other published content.
Cost per lead, often abbreviated as CPL, is an online advertising pricing model, where the advertiser pays for an explicit sign-up from a consumer interested in the advertiser's offer. It is also commonly called online lead generation.
Website monetization is the process of converting existing traffic being sent to a particular website into revenue. The most popular ways of monetizing a website are by implementing pay per click (PPC) and cost per impression (CPI/CPM) advertising. Various ad networks facilitate a webmaster in placing advertisements on pages of the website to benefit from the traffic the site is experiencing.
Behavioral retargeting is a form of online targeted advertising by which online advertising is targeted to consumers based on their previous internet behaviour. Retargeting tags online users by including a pixel within the target webpage or email, which sets a cookie in the user's browser. Once the cookie is set, the advertiser is able to show ads to that user elsewhere on the internet via an ad exchange.
Pay-per-sale or PPS is an online advertisement pricing system where the publisher or website owner is paid on the basis of the number of sales that are directly generated by an advertisement. It is a variant of the CPA model, where the advertiser pays the publisher and/or website owner in proportion to the number of actions committed by the readers or visitors to the website.
Performance Marketing, also known as pay for performance advertising, is a form of advertising in which the purchaser pays only when there are measurable results. Its objective is to drive a specific action, and advertisers only pay when that action, such as an acquisition or sale, is completed.
A view-through rate (VTR), measures the number of post-impression response or viewthrough from display media impressions viewed during and following an online advertising campaign. Such post-exposure behavior can be expressed in site visits, on-site events, conversions occurring at one or more Websites or potentially offline:
An impression is when an ad is fetched from its source, and is countable. Whether the ad is clicked is not taken into account. Each time an ad is fetched, it is counted as one impression.
In the online advertising industry, a viewable impression is a measure of whether a given advert was actually seen by a human being, as opposed to being out of view or served as the result of automated activity. The viewable impression guidelines are administered by the Media Rating Council and require that a minimum of 50% of the pixels in the advertisement were in an in-focus tab on the viewable space of the browser page for at least one continuous second.
A demand-side platform (DSP) is a concept that combines various software for advertisers to automate the process of buying and selling ad impressions in real time.
Cost per order, also called cost per purchase, is the cost of internet advertising divided by the number of orders. Cost per order, along with cost per impression and cost per click, is the starting point for assessing the effectiveness of a company's internet advertising and can be used for comparison across advertising media and vehicles and as an indicator of the profitability of a firm's internet marketing.
In marketing, attribution, also known as multi-touch attribution (MTA), is the identification of a set of user actions that contribute to a desired outcome, and then the assignment of a value to each of these events. Marketing attribution provides a level of understanding of what combination of events in what particular order influence individuals to engage in a desired behavior, typically referred to as a conversion.