Learn More about Cost Per Mille (CPM): Functions, Methods, and Benefits

Business, Business + Tech Solution, Digital, Digital Business, Technology
Cost Per Mille

Cost Per Mille (CPM) itself is a measure that shows the number of costs that must be incurred by advertisers for every 1,000 impressions that the ad gets.

If you as an advertiser want to bid or bid to pay up to 30 thousand rupiah CPM, then that means you will pay 30 thousand rupiahs for every 1,000 impressions of the ad or about 30 rupiahs per one impression.

The CPM model does not guarantee that visitors will click on the ad. So we don’t know if from those 1,000 impressions, whether the ad is actually seen and clicked by the visitor.

Therefore, the CTR or click-through rate metric is used to measure the success of a CPM-based campaign. The CPM model is often used for campaigns aimed at increasing brand awareness.

As an advertiser, you can target ads in CPM-based campaigns to reach the desired visitor demographic.

The way Cost Per Mille (CPM) works is to count impressions, a term in digital marketing to count the number of digital views of content. Impressions, also known as impressions or views, do not count the number of clicks on online ads.

Regarding the price, the CPM value between one website and another website can be different. Websites with high visitor traffic tend to charge higher CPM rates than websites with low traffic.

The Function of Cost Per Mille (CPM)

The following below are the functions of CPM for publishers and advertisers in the world of advertising, namely:

  • CPM will be a measuring tool for advertisers, such as in online advertisements, newspapers, television, radio, and magazines.
  • You can use it to compare the amount of serving costs on various media using the CPM matrix.
  • As a benchmark for calculating the relative costs that come from serving ads on a given media. You can decide on a per-1000 impressions basis.
  • Cost Per Mille is equipped with a bids feature that functions to regulate the performance of your ad.

HOW TO CALCULATE CPM

Calculating the cost of a CPM advertising campaign is quite simple. This is also a factor why CPM is commonly used and many publishers like this model.

You simply multiply the total site impressions by the CPM rate, then divide by 1,000. From there you will get the total bill for CPM fees.

First of all, know what CPM rate you can get for advertising on a website. For example, you get a tariff of 2 dollars, because this is a rate that is quite commonly used by CPM.

The second step, see how many pageviews your online ad has posted. For example, the page with your online ad was visited 7,000 times. Multiply this number by 2 dollars to get 14,000.

In the third step, divide this number 14,000 by a value of 1,000 so that it gets a value of 14. So, the total campaign cost that you have to spend is 14 dollars.

CPM ADVANTAGES FOR BUSINESS

At first glance, CPM seems more profitable for publishers than advertisers. This is because the advertiser must still pay the rate even if the website visitor does not click on the ad.

However, CPM still has a number of advantages and can be beneficial for business owners. Here’s why:

To Increase Brand Awareness

As previously mentioned, the CPM model is suitable for increasing brand awareness. For a newly founded business, it is important to introduce it to the public so that the brand is known and builds trust with potential customers.

Building brand awareness first strategically is a better step than competing for purchases from day one. This is what makes the CPM model ideal for advertisers.

Reach the Right Audience Easily

This is also one of the advantages of the CPM model to find out which audience is right for your business. You can try placing CPM ads on two sites with different demographics.

For example, you place a CPM model ad on a site that is frequently visited in your 30s and a site visit in your 20s. Then you compare the output on the two sites, which one is more profitable.

From there, you can find out which market segmentation is the right fit for your brand. You can also adjust your next marketing strategy without spending a lot of money on market research.

Performance is Easy to Measure

The success of an advertising campaign can be measured using certain metrics that fit the model. CTR is one of the suitable metrics to measure the success of CPM.

CTR can calculate the percentage of people who clicked on your ad after they saw the impression. For example, 10 clicks out of 100 impressions mean your online ad CTR is 10%.

Cost Per Mille (CPM) Can Be More Affordable Than CPC and CPA

The cost per 1,000 impressions can be lower than the cost per click or CPC, but that’s not all. CPM has the potential to lead to more user clicks and actions than other models for the same amount of ad budget.

For example, you spend 2 dollars for 1,000 impressions, while with the same budget for CPC, you pay for 50 clicks on your online ad. When you reach 50 clicks, your budget is up, your ads stop showing.


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