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cost per mille is like using fireworks to get the attention of the crowd

How to Calculate Impressions Using CPM (Cost per Mille)

Running an online marketing campaign, you might come across the term cost per mille (CPM), or cost per impression. This can actually be a very useful option when it comes to running a Google Ad campaign, with CPM being a great way to maximise brand exposure and visibility. 

People often refer to it as cost per mile, although mille is the correct term, which the linguists among you might have noticed is ‘one thousand’ in a variety of Latin based languages. This also makes more sense as a mile comes in at a fairly random 1609.33 meters – which is an awkward amount to calculate impressions with.

I digress… In fact, CPM is probably the most common form of display advertising, with the term also used in publishing, TV advertising and outdoor displays such as billboards. In fact, in the days before pay per click, the most common form of promotion would have been cost per mille/mile. After all, it’s not so easy to monitor clicks on newspaper ads.

In this article we’ll take a look at a few points around cost per mile, including:

  • What is CPM
  • When to use CPM
  • How to calculate your cost per impression

What is Cost per Mille (CPM)?

Very simply, Cost per Mille, or CPM, is the cost you pay per 1000 impressions. Google refers to this as viewable CPM (vCPM), which means that at least 50% of you ad needs to show on screen for one second or more. That, by Google’s reckoning, counts as an impression. Whether that counts as an impression in your book is another matter, but that is what you’ll pay for…

When it comes to video CPM, at least 2 seconds of your video needs to play to count as an impression. Yes, even clicking skip video after three seconds will count as a view!

Using this model of display advertising on Google means that you don’t pay for any clicks on your ad, just for the amount of times it is displayed. What this means is, if you have an ad that you think stands a high chance of attracting click throughs, you could make your money go further with a CPM ad.

Of course, those thousand impressions can soon rack up, and in fact you’ll pay for each time the ad is viewed by a single person. If you have a web user who is browsing the internet all day and they see your ad ten or twenty times, each of those views, or impressions, will count towards your total CPM. They might see your ad one hundred times and never click on it.

When to use CPM?

With the potential to get your ad seen so many times, it makes sense that the best time to use CPM is when you’re looking to maximise brand exposure. For example, if you’ve launched a new product and you just want people to know it’s out there, or if there is an event coming up soon.

Events like festivals, movies, conferences and music concerts can all benefit from the cost per mille advertising model. Likewise, new apps or games, music releases or local services can also see a boost in recognition and potential engagement with CPM advertising.

If you’re wondering if you should choose CPM or CPC (cost per click), this example could help to explain.

You’re running a marketing campaign and your budget is $1000.

As of 2018, the average cost per 1000 impressions is around $2.80, and the average cost per click is $0.75c.

For your $1000, based on 75c per click, you’re looking at around 1330 clicks. Which isn’t bad…

However, if you’re paying the average price of $2.80 per 1000 impressions, you can get your display ad seen around 357,000 times. If you get a click through rate (CTR) of 1% on those impressions, you’re potentially getting 3570 clicks for your $1000 – that’s nearly double the clicks for the same price.

Is CPM or CPC better? On these occasions, CPM might be your best choice.

  • You have a current display ad campaign with a high click through rate (CTR)
  • You’re aiming to maximise brand awareness or exposure
  • You’re not aiming for specific conversions such as visitors buying a product or signing new leads

How to calculate your cost per impression

To calculate how much you’re paying for each impression with your CPM campaign, it’s pretty straightforward.

Simply, divide your total spend on your CPM campaign by the amount of impressions to get your cost per impression.

$1000 ad spend / 357,000 impressions = $0.002.

In our example, we’re paying less than one cent per impression! Not bad. But how many of those have converted to site visitors? To calculate your cost per click for your CPM campaign, follow this simple formula.

If 1% have clicked through, 3570 people, then the formula would simply be:

Total spend/total click throughs = cost per click

So, in this example, we have paid:

$1000/3570 = $0.28c per click through. 

Which is a significant improvement on the 75c CPC mentioned above.

Is CPM the best option for me?

It might seem like using CPM is a no-brainer, with our example showing a better click through rate for a lower cost. However, our example is purely hypothetical, and in the real world, it isn’t always that simple.

First of all, in some tests, CPM doesn’t seem to perform as well as paying for cost per click (CPC). If you’re thinking of trying CPM t is worth running the same ad as both CPC and CPM to see which performs best. 

Some have also suggested that using CPM gets your ad in better locations, including better websites. Again, it’s worth running your own tests to see which campaign works best for you. It could even be that a combination of CPM and CPC advertising could work for you.

One of the key problems with CPM can be that your impression counts, no matter who loads your page. In the case of fraudulent websites, they can load your ad thousands of times, with no human eyes ever setting sight on your ad. This is particularly troublesome for video ads, which can have a relatively high cost per mille.

The problem of click fraud and ad fraud is a growing one, and can affect any PPC campaign, no matter how you choose to run your ads. ClickCease can make sure that your ad spend goes goes toward making sure only real people see your ads, so you only pay for impressions and clicks from humans. Not bots!

Oli

Since working for ClickCease, Oli has become something of a click fraud nerd, and now bores people at parties with facts about click farms and internet traffic stats. When not writing about ad fraud, he helps companies to optimise their marketing content and strategy with his own content marketing business.

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