Cost per Thousand (CPM)
A metric in digital marketing that represents the cost of 1,000 impressions or views of an advertisement.
Description
Cost per Thousand (CPM) is a commonly used metric in digital marketing to measure the cost efficiency of an ad campaign. It calculates how much money advertisers need to spend to gain 1,000 impressions or views of their ad. This metric is crucial for understanding the reach and effectiveness of advertising efforts, especially in display and social media advertising. CPM is popular because it helps advertisers compare the cost of different media channels and campaigns, providing insights into where their ad spend would be most effective. By understanding CPM, marketers can optimize their strategies to reach a wider audience without overspending.
Examples
- A fashion brand runs a display ad campaign on Instagram with a CPM of $5. This means they pay $5 for every 1,000 times their ad is shown. If their budget is $500, their ad will be displayed 100,000 times.
- A technology company launches a video ad on YouTube, and their CPM is $10. For a budget of $2,000, their ad will be viewed 200,000 times. This high CPM might be justified due to YouTube's targeted audience and high engagement rates.
Additional Information
- CPM is different from CPC (Cost per Click) where advertisers pay only when someone clicks on their ad.
- Marketers often use CPM alongside other metrics like Click-Through Rate (CTR) and Conversion Rate to gauge overall campaign performance.