CPM

CPM meaning

Cost per thousand impressions or CPM (cost per mille) is a metric that defines the cost of one-thousand impressions served: bought or sold.

Agencies, advertisers and marketers buy impressions, thus they would use CPM as a cost of the media they are buying; publishers or creators sell ad space to ad networks (e.g. Google Adsense), so they would use CPM to work out the amount of revenue they are generating per one-thousand impressions. This is called RPM (revenue per thousand).

CPMs are either static, i.e. agreed upon between the digital marketer and a publisher or network at a fixed cost, or variable (often referred to as eCPM) if buying in a real time auction process (programmatically).

As impressions are usually served in their thousands or sometimes millions, the cost per one impression is not worth understanding. Digital marketers have standardised this into a CPM or cost per thousand metric as it’s a far easier number to understand and visualise.

CPM Formula

To calculate CPM, you will need the following metrics:

1. Impressions delivered
2. Ad spend / budget / revenue

CPM in context

Buying media on different sites and platforms, across different creative sizes and using multiple data sources all impact the price you pay for one thousand impressions. These variables are why some CPMs are higher than others.

A higher CPM does not necessarily mean a bad one, and a low CPM does not always signal a great ad buy. When deciding how much you are willing to pay for the media, think back to the brief, the goal of the campaign and your brand’s positioning.

For example, if you are promoting a luxury brand that wants to be displayed in impactful formats, then paying higher CPMs of $15-20 makes sense. If you were the same brand and were buying at $2.50 CPM, then your brand’s communications may not be appearing in environments that reflect the brand’s premium positioning or be targeting the audience you wish to be reaching.

For branding campaigns, higher CPMs are usually paid for better quality, viewable, more on-target impressions, or using larger formats. For performance campaigns, the lower the CPM combined with a lower CPA or higher conversion rate, are prioritised, as the goal is to drive the most efficient sales or conversions.

If you are running B2B campaigns, the target audience is typically much harder to reach, and thus more valuable to you as a buyer. This means you will usually pay far higher CPMs compared to B2C campaigns.

Bid on viewable impressions using viewable CPM

If you’d like to pay only for ad impressions measured as viewable, you can with viewable CPM (cost-per-thousand impressions). An ad is counted as “viewable” when 50 percent of your ad shows on screen for 1 second or longer for Display ads, or plays continuously for 2 seconds or longer for video ads. You can select viewable CPM as a bid strategy when you choose CPM bidding for your “Display Network only” campaign.

How it works

With viewable CPM, you bid on 1,000 viewable impressions and you pay for impressions that are measured as viewable. Viewable CPM lets you bid on the actual value of your ad appearing in a viewable position on a given placement. Keep in mind that using a higher vCPM bid than your CPM bid is usually more effective for winning these more valuable types of impressions. This can help keep your bids competitive and continue to meet your average daily budget

Benefits

• Pay only for impressions measured as viewable.
• Your bids are optimized to favor ad slots that are more likely to become viewable.

If you’re interested in manually setting bids for viewable impressions, rather than clicks, this bidding strategy can help you achieve this goal better than other kinds of bid strategies.

Note:

• With viewable CPM, you bid on 1,000 viewable impressions and you pay for impressions that are measured as viewable.
• Generally, to keep your costs and traffic at the same level as a CPM campaign, your bid for your viewable CPM might need to be higher than your bid for a standard CPM campaign; however, you should experiment with a bid that works for your campaign goals.
• The viewable CPM bid strategy isn’t available for Search Network only campaigns.

• If you create your campaign using the viewable CPM bid strategy, and then create ads that aren’t compatible, your ads won’t run.
• A small portion of served impressions might be charged.