CPM is not the only monetization model in digital marketing campaigns. Other models include “cost per click” (CPC), in which the amount advertisers pay is calculated by how many times someone clicks on an ad, or a click-through rate (CTR) model in which the costs of the campaign are related to the ratio between the number of clicks and the total amount of impressions. On mobile devices in general, and in games in particular, advertising often focuses on other games. In that scenario, the monetization is based on an action that the user performs, or “cost per action” (CPA) rather than on the number of impressions. The CPA might track how many customers went to the app store, installed the game, and played it to the first level. There are ad networks that specialize in CPA monetization. Depending on the type of business you have, you may want to use a CPM-based network, a CPA-based network, a CPC model, or a combination of models to optimize performance, sales, and cost.
CPM stands for ״cost per mille״ or “cost per thousand” impressions, which means how much a publication earns for every 1,000 impressions an ad gets.
To calculate CPM, take the total cost of the campaign and simply divide it by the total number of impressions. Then, multiply it by 1000.
If you know the total cost of a campaign and how many impressions the campaign received, the formula to calculate CPM is simple—you don’t even need a calculator. In some cases, CPMs are static, which means that online marketers and publishers and/or ad networks agree to a fixed cost. In other cases, The CPM model is a variable, such as in programmatic marketing. In the variable method, also called eCPM, the cost the advertiser pays changes from campaign to campaign according to the real-time value and performance of the publisher inventory.
How do you calculate the average CPM? The average CPM formula divides the average cost by the average number of impressions, and multiplies the result by a thousand.
Marketers know that no two campaigns are the same, and therefore how you determine the CPM cost per campaign varies as well. A wide range of factors impact the rate paid for 1,000 impressions including:
Ad types, ad placements, and readers’ device types
Different readers respond differently, which is why it’s important to test each ad to optimize it for different audiences and devices.
CPM varies wildly between industries and different topics within the same industry can impact CPMs as well. For example, ads for new cars will likely generate more profit than ads for car cleaning products.
Advertising to some locations costs more than others, whether it’s because a certain country has more resources or a certain region is more relevant to the product. If a publisher’s audience aligns with the advertiser’s goals, the publisher will likely earn more.
If your reader is actively looking to purchase a car, car advertisers will likely be willing to pay more for the impression.
The more ad units you have, the more opportunities you have to earn.
The average CPM for Google search ads is $38.40, so if you are achieving a $30 CPM in search campaigns, you’re probably within your budget. It really depends on your total budget, industry benchmark, campaign objectives, and the ROI you can expect.
The average for display ads on the Google network is $3.12, so a $4 CPM would be slightly above the advertising budgets for a display ad marketing campaign.
A $25 CPM would be reasonable for some industries such as legal or dental services that offer a high ROI, and less so in industries like food and travel where the ROI is lower. As always, no two fields are the same.
Check OUR our CTR And eCPM calculators: