What is CPM?
CPM (Cost Per Mille) is a term for the price an advertiser pays for 1,000 ad impressions. Ads can be text, image or video ads on platforms such as Google, YouTube, Facebook, blogs and news media. There are not necessarily 1,000 unique page views, as one person may see the same ad several times.
Two other common payment methods 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, for example, a lead. Many advertisers prefer these payment models to the CPM model because they pay for more tangible results.
However, there are cases where CPM is a more appropriate form of settlement. For example, if brand awareness and message delivery are your campaign objectives and you do not have a strong interest in your audience visiting your website. An example might be Coca Cola, a company that makes its living primarily by selling through physical stores.
The amount that the ad publisher receives from the advertiser for 1,000 ad impressions is called the RPM (Revenue Per Mille).
Examples of advertising payment models.
How to calculate CPM?
You can calculate the CPM for a campaign by dividing the cost price by the number of thousand impressions. The formula is cost/(views/1000). In other words, if the cost price is DKK 5,000 and the number of views is 100,000, the CPM price is DKK 50.
CPM rates can vary greatly depending on the media you advertise on, the size of your ads and where on the page the ads are placed. Therefore, it is impossible to answer what is a good and a bad CPM price without knowing your specific situation.
Whether CPM is a good form of payment can be determined by looking at whether you earn more from 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 can make sense.
Before you buy a CPM campaign, you need to be aware of where on the page your ads will be placed and what format your ads will have. Of course, a small ad at the bottom of a page has significantly less value 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 already, 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 billing model. The way it works is that you bid the price you want to pay per 1,000 impressions.
If you want to get a ranking, you have to bid a higher price than the current ads that are 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 an abbreviation for?
CPM is an abbreviation for Cost Per Mille, in English "payment per 1,000 views".
What is a good CPM price?
The CPM price varies depending on ad size, ad placement and topic, among other things. For example, a large ad on a niche company car site has a much higher CPM than a small ad on a student knowledge portal. It is therefore impossible to say what a good CPM is.
How is CPM calculated?
The CPM for an ad campaign can be calculated using the following formula: cost/(impressions/1000). If the cost price is DKK 5,000 and the number of views is 100,000, the CPM price is DKK 50.