CPM — what is cost per thousand (mille), and why does it matter?
Metrics matter in digital marketing and advertising. To track campaign performance and build successful strategies that scale, you need to know how ads reach your audience and consider different pricing approaches.
When refining ad spend strategies, marketing executives often focus on metrics that start with the letter C — such as CPM (cost per mille), CPC (cost per click), and CPA (cost per acquisition). But many leaders don’t understand the nuances of each term and, by extension, which pricing model best fits their business goals.
In this article, we’ll dive into the definition of CPM, how CPM differs from CPC and CPA, the benefits and difficulties of CPM campaigns, and how you can get started with CPM.
What is CPM?
Cost per mille (CPM), more commonly called “cost per thousand,” is how much an advertiser pays for 1,000 impressions. In other words, CPM is the amount it costs to purchase 1,000 opportunities for people to view your ad. The M in the acronym comes from the Latin term mīlle, meaning 1,000.
If your goal is to target more people through campaigns, CPM is the right fit for you. This performance marketing payment model is useful for expanding your audience at the top of the funnel, allowing you to strategize how often your content should appear on users’ screens and feeds.
For example, let’s say a platform charges a CPM rate of $8. If you wanted to build brand awareness by purchasing 10,000 impressions on that site, the total cost would be $80.
To determine how much you can afford to invest in impressions, you can calculate your maximum CPM by dividing the campaign’s budget by the number of desired impressions and then multiplying that by 1,000.
For example, if you had $50 to invest in a campaign and wanted to purchase 10,000 impressions, your CPM rate would come to $5.
CPM vs. CPC
As you refine your company’s advertising strategy and objectives, you should understand how CPM differs from other pricing models.
Marketers can easily confuse CPM with other “cost-per” advertising terms, such as cost per click (CPC). Also known as pay-per-click (PPC), CPC represents how much an advertiser pays based on the number of clicks an ad receives.
Unlike CPM, which covers opportunities for people to view your campaign, CPC looks at direct engagement. This metric is useful for understanding how and where potential customers engage with your campaigns.
If your strategy focuses on sales and return on investment over brand awareness, CPC might be your best bet. This pricing model is ideal if your goal is driving traffic to your site through platforms like search engine results pages (SERP) and social media channels. CPM can also apply to these platforms, but it would be a better approach when focusing on brand visibility.
CPM vs. CPA
Another common pricing model is cost per acquisition, also known as cost per action (CPA). This approach concentrates on conversion — acquiring leads and customers.
While CPM is based on how many people have the chance to view your ad and CPC prioritizes engagement, CPA measures when users take a specific desired action.
For example, imagine your company launches a new app and creates a campaign promoting exclusive in-app offers. You could measure campaign performance by defining the acquisition behavior as an app download. Using this pricing approach, your CPA would be the amount an advertiser pays for one user to install the app.
Compared to CPM, which centers on people unfamiliar with your product or brand, CPA deals with audience members closer to the bottom of the funnel. These users typically have already interacted with your brand and are more likely to take action.
Three benefits of a good CPM campaign
While the best pricing model for your company may depend on your specific ad campaigns and goals, CPM is a popular choice for growing your company and strengthening your brand. The top three benefits of a good CPM campaign are:
- Improving brand awareness. As people have more opportunities to learn about your products or services, your company’s authority and credibility will grow.
- Testing ad designs. By combining CPM with another metric like click-through rate (CTR), you can gain valuable insights into which ads are most engaging and successful.
- Discovering and refining target audiences. Purchasing impressions allows you to reach more potential customers and solidify leads.
Difficulties of CPM campaigns
While CPM campaigns can be vital to expanding your audience, you’ll need to keep a few challenges in mind. It can be tricky to track impressions precisely, and advertisers may not account for duplicate viewers, bots, ad-blocking software, and page-loading problems.
CPM campaigns also involve fraud risk, as unethical site owners can use bots for impressions. Others might charge unnecessary services, claiming protection from brand safety concerns or ensuring ad viewability.
It’s important to research platforms thoroughly before purchasing impressions and consider the possibility of skewed data.
Getting started with CPM
If you’re looking to build brand awareness and focus on ad impressions, it might be a good time to craft a CPM campaign.
Using a CPM model doesn’t need to be complicated. Adobe Marketo Engage can help your company deliver exceptional experiences across every stage of the customer journey — and drive growth efficiently.
To learn more about whether Adobe could be a good fit for your company, check out this customer story about how Adobe empowered KeyBank to reduce its average CPM by 50%.
Learn more about the full features of Adobe Marketo Engage.