What is Cost per Thousand (CPM)?
Cost per Thousand (CPM) is a metric that measures the cost of an advertising campaign relative to the number of impressions (views) it generates. It is typically used as a benchmark for pricing online ads, as it provides a more accurate understanding of the cost associated with reaching a certain number of people. CPM is calculated by dividing the cost of the campaign by the number of impressions it generated, and then multiplying that result by 1,000.
Examples of Cost per Thousand (CPM)
To illustrate how CPM works, let’s consider a simple example. Suppose a company spends $2,000 on an online ad campaign that generates 10,000 impressions. The CPM for this campaign would be calculated as follows:
- $2,000 / 10,000 impressions = $0.20
- $0.20 x 1,000 = $200 CPM
In this example, the CPM would be $200, meaning that the cost of reaching 1,000 people was $200.
Benefits of Cost per Thousand (CPM)
CPM is an important metric for evaluating the effectiveness of an online ad campaign. It allows advertisers to compare the cost of different campaigns and determine which one is more cost-effective. CPM also provides insight into the reach of the campaign, as the higher the CPM, the more people the campaign is reaching. In addition, CPM allows advertisers to adjust their campaigns in real-time, as they can quickly determine which ads are performing better and adjust their budget accordingly. This helps to ensure that campaigns are as effective as possible and that the most cost-efficient way to reach an audience is being utilized.
Conclusion
Cost per Thousand (CPM) is an important metric for evaluating the effectiveness of online ad campaigns. It allows advertisers to compare the cost of different campaigns and determine which one is more cost-effective. CPM also provides insight into the reach of the campaign, as the higher the CPM, the more people the campaign is reaching. For more information, please see: