The acronym CPM stands for cost per mille , with the Latin and Old French word “mille” meaning one thousand. For this reason, you’ll often see CPM referred to as cost per thousand. More technically, CPM represents the cost a marketer will pay for every thousand impressions of a digital ad.
Cost per mille is one of the pricing models that businesses can leverage in a variety of ways. In addition to understanding the use cases for advertising, it’s also important to understand how CPM works. Ultimately, CPM can be a great tool for businesses and anyone looking to advertise their service or product.
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What is CPM?
In digital marketing , CPM refers to the amount an advertiser pays for 1,000 impressions of an ad on a web page. The important thing here is to understand what an impression means . An impression means that the ad, as an element of a web page, has loaded and received one view. It is not the same as a page view.
When you choose CPM as your payment method, the advertiser agrees to pay the ad publisher a pre-determined amount for every thousand impressions. This means the publisher is compensated for each ad shown, giving them more predictable profits.
However, to be viewed by a thousand people, the advertiser's website must have a lot of traffic, so this type of campaign pricing is most commonly used by news portals or well-known blogs. CPM is used in branding campaigns , for example, which aim to increase brand awareness of a company or product. It is also a strategy recommended for medium and large companies that have a well-structured marketing area and a clear strategy.
The CPM formula in marketing is as follows:
CPM = Total Cost / (Views / 1000)
For example, if an advertiser makes the following agreement with the publisher:
1) 10,000 ad impressions in a medium rectangle format, with dimensions of 300 x 250, with a CPM of R$5
2) 10,000 impressions of ads in header format, with dimensions of 728 x 90, with a CPM of R$7