What is Cost Per Thousand (CPM)?
Cost Per Thousand, or CPM for short, is one of those need-to-know terms that every marketer should know. It is a metric that analyzes the average spending you or your client had for every thousand impressions on your ad. Like other metrics, it makes sure that you are not over or underspending on your ad campaign and that the money you are putting into it reflects the conversions and engagements you are getting out of it.
Keep in mind, this means you are charged for the views, and not necessarily any clicks. This could often mean you might be paying higher than a CPC campaign.
Due to the nature of CPM not including clicks, many marketing professionals use this metric in tandem with the click-through rate in order to have a thorough understanding of just how far these impressions are going.
What is an Impression?
If you are charged per thousand impressions, you should have a clear understanding of what an impression is in the first place, right?
First of all, impressions are a metric only business or ad accounts have access to view and analyze located in the campaigns section of your Ad Manager. Every time a customer views your ad or post, that is counted as an impression. For it to count as another impression, the user has to load your page again. These also have to be valid page loads so bots or anything of that nature is never factored into your impressions metric. For videos, the video does not even have to play for it to count as an impression (although engagement and audience retention are key for video ads).
Impressions do not involve clicks, but those who also clicked on your ads are factored into your impressions. In other words, they are the precursor to generating leads and a dependable engagement with your target audience.
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How is CPM Different From CPC?
While both CPM and CPC (or cost per click) are ad campaign pricing methods, the way they are priced is essentially the opposite of one another. With CPC, you are charged per click (as the name might suggest) rather than your thousand-person reach segments. This might be more enticing for those with initially smaller budgets or with extremely defined target audiences from who it might be easier to leverage a click.
What are the Drawbacks of a CPM Campaign?
If you do not target your CPM campaigns the way you target your other ones, you may be paying for a high number of ad campaigns that do not result in any profit for you or your client. However, this can be avoided with the right marketing and consulting strategy.
