CPM: Cost per mille
What is CPM?
CPM, or Cost Per Mille, is the amount advertisers pay to publishers for every 1,000 ad impressions. This pricing model is sometimes referred to as Cost Per Thousand (with the “M” standing for ‘mille’ or Latin for 1,000).It allows game developers and publishers to ensure that their development efforts are remaining net-positive, and clearly illustrates how much time and resources they should allot for updates or optimizations to their portfolio.
CPM in marketing and advertising
CPM is an important metric for both advertisers and app developers, since it defines how much ad space will cost, and therefore how much developers or publishers will get paid for every 1,000 unique impressions. Today, CPM monetization is a regularly employed method for pricing mobile app advertising space.
One common way to determine the efficiency of a CPM campaign is to look at click-through rates, or the ratio of clicks an ad receives compared to overall impressions.
The more traditional CPM advertising model varies a bit from newer forms of mobile and in-app advertising because it doesn’t require a specific outcome from users in order to be considered complete. For example, in cost-per-completed-view, advertisers don’t pay publishers until a video ad is watched in its entirety, so simply looking at the ad isn’t enough in that case. Similarly, cost-per-engagement advertising requires some kind of action beyond the initial impression, like taking a survey or playing a mini-game. Unlike these other measures, CPM pricing is ideal for campaigns with a goal of increasing exposure and brand awareness instead of specific user action goals, like installing an app or registering for a service. After all, it’s rare for audiences to click on an ad for a product made by a brand they’ve never heard of. A CPM campaign is great for creating and elevating brand awareness in preparation for a more conversion-oriented campaign.
eCPM vs CPM
CPM is also used as part of measuring effective cost per thousand impressions, or eCPM. While both measure costs for 1,000 impressions, the former is exclusively based on how much an advertiser is willing to spend on 1,000 ad impressions, and typically exists in the context of brand awareness campaigns that don’t have specific performance goals. The advertiser is looking for a specific amount of impressions, or eyeballs, and that is what they pay for.
In contrast, eCPM also includes CPM but measures the cost of 1,000 impressions in the context of a campaign with a pricing model based on performance. In practice, this means that the cost per thousand impressions is calculated based on how many impressions it takes to achieve a performance goal, like an install, or registration.
CPM formula: How to figure out CPM
Calculating CPM requires having some basic data on an app’s ad impressions - such as the total cost of the campaign, as well as the number of impressions it received. To measure CPM, you divide the total cost of the campaign by the number of impressions. The result is then multiplied by 1,000, generating the CPM figure, also known as the CPM rate.
CPM calculation example
For example, if the total cost to run a campaign is $300, and it receives 5000 impressions, the CPM for the ad would be $60.