CPM is a term used in advertising that is representative of the cost of 1000 ad impressions. A single impression is clarified as one potential customer viewing an advertisement.
CPM is actually calculated by extracting the cost of the advertisement and dividing it by the total amount of impressions that have been received, then multiplying the total by 1000.
Usually, a CPM rate is established by proxy of its advertising space and is hone used in order to calculate the overall costs of a campaign.
Steps To Calculate CPM
- Determine your overall budget for the campaign.
An advertisement campaign is often used in order to convey products or ideas to a specified audience. Thus, if you spend $10,000 dollars on an advertising campaign, then this is half of the information that you require in order to calculate the overall CPM.
- Determine the total amount of impressions.
In order for you to fully calculate the overall cost of 1000 impressions, you will need to ascertain the total amount of impressions that you desire (i.e. your targeted audience for an advertisement.)
- For instance, any company that wishes to run an advertisement campaign and expects to receive 500,000 impressions can use tools like google analytics in order to determine the type of traffic that their website is receiving. Print and television will usually use rating agencies to obtain this data.
- Make your calculations.
In order to do the math, you need to divide the cost of your campaign by the number of impressions, then times this by 1000.
For example, a company that spends $10,000 dollars on an ad campaign will typically be spending $20 per 1000 impressions.
How To Calculate A Potential Audience With Your Budget
If you have set a specific budget and rate, then you will be able to determine whether your potential audience has been reached and whether you have spent your money efficiently.
Your potential audience can be calculated by multiplying the total cost by 1000 then dividing this by your CPM. For instance, a $50,000 budget with a CPM of 10 can potentially receive up to 5,000,000 impressions.
Sell Your Space
If you own a website and you wish to earn revenue from advertising.
CPM will be calculated by assessing your site’s overall traffic and this will inherently determine the amount of money that a company wishes to spend on advertisements.
When running web advertisements, this is often carried out automatically using a service like Google Analytics.
The overall value of your ad space can be calculated and sold accordingly to those who bid for your website space.
How To Maximize Advertising Cost Benefit
CPM rates are highly useful to companies who are trying to reach the largest audience possible while reducing their overall advertising costs.
CPM can be variable and it can also be used in order to make comparisons between costs of different spaces and media advertisements.
Of course, there are numerous other factors that can have an impact on these costs, including ad visibility and demographic information.
This will inherently impact how efficient your advertising campaign turns out to be. CPM is often used as a concrete baseline in order to analyze costs.
There are crucial differences between viewed impressions (vCPM) and served impressions (CPM). A viewed impression is shown whenever an advertisement is requested or displayed to the user.
To contrast, a served impression doesn’t take into consideration what happens whenever a user leaves website prior to the ad loading, or if they are using an adblocker on their web browser.
Those who run advertisements should focus on viewed impressions when they are available for analysis as this is a far more accurate means of determining the overall performance of an ad campaign.
Fortunately, you can keep this process relatively simple by using online calculators if you do not wish to burden yourself with the calculations yourself. CPM can also differ depending on the cost of specific keywords.
The vast majority of Ad networks will use a bidding system to calculate CPM, allowing their users to bid on specific keywords. This means that the higher the competition for the keyword, the higher the cost of those specific words.
To conclude, CPM can be calculated by following the method that I have outlined above. It is important to research various advertising platforms like Google Ads in order to determine which platform provides you with the best value per 1000 clicks.
You should also have obtained a good understanding of your overall budget, and you will inherently be able to calculate which keywords you are willing to bid on.
Of course, some keywords will invite more traffic than others, and these keywords tend to cost more to use by proxy.
You can also allocate space for advertisements on your own website. Selling space for ads on your webpage is one of the easiest means of making money without requiring much effort whatsoever.
Your CPM will be calculated by assessing the traffic that your website receives and you will receive offers from advertisers in alignment with the amount of traffic that your website is receiving.
It is also important to note the crucial differences between served impressions (CPM) and viewed impressions (vCPM). A viewed impression occurs whenever an advertisement has been displayed or requested by the user.
In direct contrast, a served impression will not consider what occurs if an individual has left a website prior to the website loading, or if they are using AdBlock software on their device.
You will easily be able to calculate your CPM by using the methods that I have outlined above. As always, you can always use online calculators in order to make your calculations far easier.
This will also save you a great deal of time and effort in the process of working out your CPM, and will help you adjust your budget accordingly.