What is Effective Cost per Thousand?
Effective cost per thousand (CPM) is a term used in advertising to measure the cost of an advertisement per thousand impressions. It is one of the most commonly used metrics in the advertising industry and is used to evaluate the cost-effectiveness of campaigns. CPM is calculated by dividing the cost of a campaign by the number of impressions, then multiplying it by 1,000. For example, if an advertisement costs $10,000 and receives 10,000 impressions, the CPM would be $1.
How is CPM Used?
CPM is used to compare the cost of different campaigns and determine which one is the most cost-effective. It is also used to measure the efficiency of advertising campaigns, as it can be used to calculate the return on investment (ROI) of a campaign. CPM is also used by advertisers to determine the right price for an advertisement. Advertisers will often use CPM to decide how much to bid for an advertisement, as the higher the CPM, the more expensive the advertisement will be.
Advantages and Disadvantages of CPM
CPM has a number of advantages, including:
- It can be used to compare the cost of different campaigns.
- It can be used to measure the efficiency of campaigns.
- It can be used to determine the right price for an advertisement.
However, CPM also has some drawbacks, including:
- It does not take into account the quality of the impressions. CPM only measures the cost per thousand impressions, not the quality of those impressions. Therefore, it does not take into account whether or not the impressions are from people who are actually interested in the product.
- It does not measure conversions. CPM does not measure how many people actually clicked on the advertisement or purchased the product.
Conclusion
Effective cost per thousand (CPM) is a useful metric for measuring the cost-effectiveness of campaigns and determining the right price for an advertisement. However, it does have some drawbacks, as it does not take into account the quality of the impressions or measure conversions.Cost per thousand – WikipediaImpression (online media) – WikipediaReturn on investment – Wikipedia