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CPM is a digital marketing term that stands for cost-per-mille, or cost-per-thousand. Mille is the Latin word for thousand, which is why thousand is represented by “M” in Roman numerals. It is the cost to reach 1,000 visitors, readers, viewers, or listeners for an advertising campaign.
CPM measures the cost of an advertisement per 1,000 online advertising impressions. An impression is when the ad is displayed on a web page. The CPM model is usually used as a metric in advertising bidding systems for internet marketing. These systems use CPM to indicate the advertising costs for the advertiser per thousand people exposed to their message. For example, if a CPM price is set at $5.00, the advertiser needs to pay $5.00 for every thousand impressions of their ad.
Formula for CPM
CPM = (Ad Spend / Ad Impressions) * 1000
Many factors affect average CPM prices for a CPM marketing campaign. From the device the ad is being viewed on to the time of year, it’s challenging to list them all. However, they tend to be broken up into four broad categories that can help us better understand the many influential factors over CPM ads.
What Affects CPM
- Context
Context applies to factors such as the quality of the ad space, the intent of the audience, and the depth of the visitor session on the site.
- Audience
Country your target audience is located in and the device they’re viewing the ad on relating back to the audience category. Geography makes a difference in multiple ways because it impacts the spending power of individuals and how advanced the online advertising industry is in that region.
- On-Page Elements
CPM is also influenced by on-page elements such as ad viewability and ad placement. That doesn’t necessarily mean the display ad has to be at the top of the page—the best position is the place where a viewer is most likely to linger.
- Season
Retail goods have a higher CPM during the gift-buying season at the end of the year, while the CPM for items such as outdoor sports equipment will increase in warm weather seasons.
