CPM, or Cost Per Mille, is a metric used in digital marketing to measure the cost of a thousand impressions or views. It is one of the most commonly used metrics in the advertising industry and is used to determine the cost of display, video, and social media ads. CPM helps marketers evaluate the cost-effectiveness of their advertising campaigns and determine the ROI (Return on Investment) for each campaign.
Calculating CPM is a straightforward process, and in this article, we will discuss how to calculate CPM in digital marketing.
Step 1: Identify the Cost of the Campaign To calculate CPM, you need to determine the total cost of the campaign. The cost includes everything you spent on the campaign, including ad spend, agency fees, copywriting costs, design costs, etc.
Step 2: Determine the Number of Impressions The next step is to determine the number of impressions the ad received. Impressions are the number of times the ad was displayed to users. If you are running multiple campaigns, calculate the number of impressions for each campaign separately.
Step 3: Calculate the Cost per Thousand Impressions Once you have determined the campaign cost and the number of impressions, divide the campaign cost by the number of impressions and multiply it by 1,000 to get the CPM.
CPM = (Campaign Cost / Number of Impressions) x 1,000
For example, if the total campaign cost was $1,000, and the ad received 50,000 impressions, the CPM would be calculated as follows:
CPM = ($1,000 / 50,000) x 1,000 = $20
Step 4: Evaluate the CPM After calculating the CPM, you need to evaluate it to determine whether it is a good or bad CPM. A good CPM varies depending on the industry, product, and campaign goals. For example, a CPM of $20 might be excellent for a low-cost product, but it might be too high for a high-ticket item.
To evaluate the CPM, compare it with other campaigns you have run in the past or similar campaigns in your industry. You can also use benchmarks to determine whether your CPM is competitive or not. Keep in mind that CPM varies depending on the platform, ad format, and targeting options, so it's essential to evaluate the CPM in conjunction with other metrics such as click-through rate (CTR) and conversion rate.
Conclusion Calculating CPM is a critical metric for evaluating the cost-effectiveness of your digital marketing campaigns. By knowing your CPM, you can determine the ROI of your campaigns and make informed decisions about future campaigns. Keep in mind that CPM varies depending on the industry, product, and campaign goals, so it's essential to evaluate the CPM in conjunction with other metrics. By following the steps outlined in this article, you can easily calculate CPM and evaluate its effectiveness for your business.