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CPM (Cost Per Mile)

CPM is an abbreviation of Cost Per Mille and refers to the price an advertiser pays for 1,000 ad impressions. In other words, it's a payment method in online marketing. In this article, you can learn a lot more about the concept of CPM and how to calculate CPM prices.

What is CPM?

CPM (Cost Per Mille) is a term for the price an advertiser pays for 1,000 ad impressions. The ads can be text ads, image ads or video ads on platforms such as Google, YouTube, Facebook, blogs and news media. It's not necessarily 1,000 unique page views, as one person can see the same ad multiple times.

Two other common forms of payment for ads are CPC (Cost Per Click) and CPA (Cost Per Acquisition). In these cases, the advertiser only pays when a person clicks on an ad or converts to a lead, for example. Many advertisers prefer these payment models to the CPM model because they pay for more concrete results.

However, there are cases where CPM is a more appropriate form of payment. This is the case, for example, if brand awareness and communicating a message is your campaign goal and you don't have a strong interest in your target audience visiting your website. An example is the company Coca Cola, which primarily lives from sales via physical stores.

The amount the ad publisher receives from the advertiser for 1,000 ad impressions is called RPM (Revenue Per Mille).

Examples of advertising payment models.


How do you calculate CPM?

You can calculate the CPM price of a campaign by dividing the cost price by the number of thousands of impressions. The formula is as follows cost price/(impressions/1000). In other words, if the cost price is $5,000 and the number of impressions is 100,000, the CPM price is $50.

CPM rates can be very different depending on the media you advertise on, the size of your ads and where on the page the ads are placed. Therefore, it's impossible to answer what a good and bad CPM rate is without knowing your specific situation.

Whether CPM is a good payment method can be calculated by looking at whether you earn more on the campaign than what you paid. The formula is quite simple: If your profit on the users who click through to your website is greater than what you pay for the entire CPM campaign, then the price you pay per 1,000 impressions is worth it.

Before you buy a CPM campaign, you need to be aware of where on the page your ads will be placed and the format of your ads. A small ad at the bottom of a page is obviously significantly less valuable than a large ad at the top of a page, and the CPM price you pay should reflect this.


CPM and Google Ads

Do you know about Google Ads In advance, you will know that you as a company have the opportunity to bid with your ad in their so-called "auction system".

Although CPC is now more widely used than CPM at Google, it is still possible to use CPM as a payment model. The way it works is that you bid the price you want to pay per 1,000 impressions.

If you want a placement, you need to bid a higher price than the current ads being displayed.


Frequently asked questions

What is CPM? +

CPM (Cost Per Mille) is a term for the price an advertiser pays for 1,000 ad impressions.

What is CPM short for? +

CPM is an abbreviation for Cost Per Mille, in Danish "payment per 1,000 impressions".

What is a good CPM price? +

The CPM price varies depending on ad size, ad placement and topic, among other factors. For example, a large ad on a niche media for company cars has a much higher CPM price than a small ad on a knowledge portal for students. Therefore, it is impossible to answer what a good CPM is.

How is CPM calculated? +

The CPM for an ad campaign can be calculated with the following formula: cost price/(impressions/1000). If the cost price is $5,000 and the number of impressions is 100,000, the CPM price is $50.

Ian Rosenfeldt</trp-post-container
Ian Rosenfeldt</trp-post-container
Founder, COO & Chief AI Strategist
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