October 2, 2024
by Bartosz Salamon
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What is CPM?
CPM stands for Cost Per Mille, with “mille” being the Latin word for thousand. In digital marketing and advertising, CPM refers to the cost of reaching 1000 impressions of an advertisement. An impression is counted each time an ad is displayed to a viewer, regardless of whether they click on it. CPM is one of the most commonly used pricing models in online advertising, particularly for display ads, video ads, and social media advertising.
How CPM Works
When advertisers purchase ads using the CPM model, they are essentially paying for visibility. For example, if an ad campaign has a CPM of $5, the advertiser will pay $5 for every 1,000 impressions of their ad. The total cost of the campaign can be calculated by multiplying the CPM by the number of thousands of impressions desired.
Why you should use CPM?
It is one of the most fundamental and widely used metrics in digital marketing. CPM is crucial because it offers a simple and direct way to measure the visibility of an ad campaign, making it a go-to metric for almost every online advertising activity, including display ads, social media marketing, video ads, and programmatic campaigns. Whether the goal is brand awareness or maximizing reach, CPM provides advertisers with an easily understandable method to gauge how many people are seeing their ads and at what cost. Due to its versatility and simplicity, CPM is a standard pricing model across platforms like Google Ads, Meta, TikTok, and more, ensuring that it’s central to almost any digital marketing strategy.
Limitations of CPM metric
While CPM is effective for brand awareness, it’s not ideal if the primary objective is to drive clicks or direct actions like sales. Because you pay per impression rather than performance, you might end up paying for views that do not result in engagement. Therefore, for campaigns focused on clicks or conversions, CPC (Cost Per Click) or CPA (Cost Per Acquisition) might be more appropriate.
There are also multiple different modifications to classic CPM such as:
| Type of CPM | Difference |
|---|---|
| vCPM | Cost per 1000 visible impressions |
| aCPM | Cost per 1000 attentive impressions which are based on multiple additional metrics like viewability, time spent on screen, heat maps and others |
| hvCPM | Cost per 1000Â human visible impressions with usage of anti-fraud solutions |
| eCPM | Cost per 1000 effective impressions which led to generated revenue |
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