If you are running an online advertising campaign, then there is a very high chance that you’re going to come across CPM. It can be very helpful, especially when you know how to use it and calculate it.
But if you’re new to the online advertising game, you might be a bit confused about what CPM actually is and how you are supposed to calculate it.
It can be quite overwhelming when you have never had to calculate something like this before.
In this article, we will be going over the basics of what CPM actually is, how you calculate it, and when you should use it. So let’s dive in.
What Is CPM?
Before we get into calculating CPM, you need to have a basic understanding of what it actually is.
CPM stands for Cost per Mille. In short, it is the cost you pay per one thousand impressions. Lots of people use pay-per-click (PPC) for their advertising campaigns now, but CPM was once the dominant thing people used.
It may not be as popular as PPC now, but it’s still a great metric to use.
If we’re going by Google’s standards, then at least 50% of your ad needs to appear on the screen for at least a second for it to count as an impression.
If your ad is a video, then it needs to appear on the screen and play for at least 2 seconds. The good news for video ads is even the 3 seconds it takes to skip the ad counts!
A single impression doesn’t seem like much, but when lots of people are leaving them, they soon rack up and you’ll hit that one thousand impressions mark in no time.
How To Calculate CPM
So now you have a better understanding of what Cost per Mille (CPM) is, let’s look at how you actually calculate it.
First, we will look at Cost per impression. This formula is based on every single impression, rather than every one thousand.
All you need to do for this is divide the total cost of your CPM advertising campaign by the total number of impressions. So it will look like this:
AD SPEND / IMPRESSIONS = Cost Per Impression
Next, let’s look at Cost per one thousand impressions. To calculate this, you need to take your CPM cost or the total cost of one thousand impressions and multiply it by 1000.
The formula will look like this:
(AD SPEND / IMPRESSIONS) x 1000 = Cost Per One Thousand Impressions
As long as you use these formulas, you should have no issues in calculating your CPM.
When Should You Use CPM Ads?
If you’re looking for an advertising strategy that is going to get maximum exposure, then CPM is perfect for you. There are many different examples that constitute using CPM.
Some of the other examples include:
- Advertising campaigns for music festivals
- Festivals in general
- The launch of a new product
- New apps or games
- Conferences
CPM advertising really helps your campaign get more exposure and reach people who wouldn’t usually see it if you did not use this format.
Whenever you are using CPM in your ad campaigns, boosting your recognition and engagement is the key thing you want to do.
Is CPM Always The Best Option?
While you might think that CMP is always the best option, it might surprise you to know that it is not always the best choice.
There are some cases in which CPC (cost per click) is a lot more effective than CPM.
It purely depends on what your advertising campaign is and what sort of audience you are working with.
If you are going to do tests for CPM, it’s in your best interest to test out CPC too.
You won’t know which one works best for you until you’ve tried them both out.
Bots, Click-Farms, And How To Avoid CPM Damage
One of the biggest problems with CPM is impression counts.
There are lots of fraudulent ads out there that can load your ad thousands of times without any human eyes actually seeing them, and this can be a big problem for your CPM and impression counts.
Bots in general tend to cause a lot of problems for everyone, not just advertising campaigns.
The best thing you can do to minimize bots and ad fraud is to use a website or plugin on your ads that are designed to ward off bots, click-farms, and other sources of traffic that are not genuine.
While you might think that most internet traffic is human, you might be surprised to learn that 40% of all internet traffic is not human.
Because such a large percentage of traffic is fraudulent or non-human, this can seriously affect your impressions and CPM and you can, in essence, lose a lot of money.
This is why getting some protection is definitely in your best interest.
You will always have to deal with bots and related non-human entities during your ad campaigns, but when you have the right kind of protection, it can drastically reduce the effect it will have on the campaign.
You want as many of your impressions to be human and as organic as possible for the best results.
Conclusion
While you may have been scratching your head trying to work out how to calculate CPM before you read this article, hopefully now you have a much better idea of how to do it.
As long as you follow the formulas we have laid out for you here, you’ll have no problems or issues in working out what your impressions of your CPM are.
If you are concerned about whether or not CPM is the right choice for your ad campaign, the best thing you can do is just test it out and see what works best for you.
It might take a little bit of trial and error, but once you have a strategy in place and you know what works best for you, the sky will be the limit!
Hello, my name is Jack O’Neil and I have been in the marketing industry for almost 10 years. I focus on online marketing, SEO, advertising, and more.
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