CPM (Cost Per Mille) is a metric used in advertising that represents the cost an advertiser pays for every thousand impressions of their ad. It is a common pricing model in digital advertising, where advertisers pay a fixed amount for every one thousand times their ad is displayed, regardless of whether the user interacts with it or not. CPM is used to measure the efficiency and cost-effectiveness of an advertising campaign.
Significance and Usage
CPM is significant because it allows advertisers to compare the cost efficiency of different advertising campaigns or platforms. It helps them estimate the expenses associated with their ad placements and evaluate the return on investment. Advertisers can use CPM to plan their budgets, negotiate ad rates, and optimize their campaigns based on the cost-effectiveness of reaching a desired number of impressions.
Example
Suppose an advertiser agrees to a CPM rate of $10 for their banner ad. If the ad receives 50,000 impressions, the total cost to the advertiser would be $500 (50,000 impressions / 1,000 impressions per CPM * $10 per CPM).