What Wikipedia won’t explain about CPM in marketing

It all started when the trees were taller and ads were very different. An open-ended conversation was the basis of word-of-mouth marketing and advertising. It used to be the most effective ad format that managed to accomplish its ultimate task — making consumers remember the name and product information — ninety-nine times out of a hundred.
Digital Ad Spending forecast
It all started when the trees were taller and ads were very different. An open-ended conversation was the basis of word-of-mouth marketing and advertising. It used to be the most effective ad format that managed to accomplish its ultimate task — making consumers remember the name and product information — ninety-nine times out of a hundred.

It was then that businesses realized that ad programs and tailored strategies could convert their clients into ambassadors. From that moment on, advertising dramatically evolved, now achieving a worldwide revenue of $465.5 billion in 2021.

Today, media ads act as catalysts to generating positive word-of-mouth and boosted sales. Needless to say that successful ad strategies can achieve even greater results like reaching a wider audience, achieving more ad mentions, and improving the impression share. The latter is all about assessing the cost-efficiency of your ads, which is known as CPM advertising.

This model earned enduring popularity in the digital advertising world. It’s only natural since so many brands and marketing experts strive to expand their omnichannel strategies and increase ROI.

In this article, we’ll review the meaning behind CPM in marketing and how it can impact your ad campaigns.

What Is CPM And Why Does It Matter?

If you’re new to the digital advertising game, you may not be familiar with the term. CPM, otherwise known as “cost per mille” or price per thousand impressions, is a pricing model and an ad method that helps marketers to assess cost-efficiency and determine the impact their ad campaigns have.

What about impressions? An impression is a unit of measure. Ad impressions are counted when an ad is served or viewed within the app or on-site. That’s right, there are two types of impressions: viewable and served. The latter implies an automated activity of displaying the ads. The term “viewable impression” implies that an ad has to actually be viewed by real people.

Why Advertisers Use CPM

CPM advertising enables brands to claim the attention of a large audience and concentrate it on a specific ad unit or content piece. It’s often used as a top-of-the-funnel strategy that helps brands increase the volume of inbound traffic and leads. As a result, brands gain desirable recognition and awareness, achieve a better understanding of which ad and content types resonate, and which require further improvement.

Why Developers And Publishers Use CPM

It’s no secret that modern consumers spend most of their time on apps. That’s why mobile advertisers, developers, and publishers run most ad campaigns inside the mobile apps. In-app advertising has been one of the hottest topics, trends, and ways to maximize revenue for quite a while now.

That’s why CPM is one of the most valuable metrics for brands and publishers. It enables brands to determine the price of a thousand impressions in a specific app and publishers to determine the revenue they can generate with a thousand impressions served. These figures allow all parties to determine the required optimizations and ensure that their efforts remain net-positive.

Unfortunately, the pandemic made many brands pull their budgets and stop running in-app ads in early 2020, which led to cuts in mobile ad spending.

How To Calculate CPM

Here’s a short step-by-step guide to calculating CPM for your ad campaign.

  1. Determine a CPM rate. Let’s say that your rate is $3.40.
  2. Multiply the rate by the number of served/viewed impressions. Let’s say that the ad was viewed 6,000 times, which means 6,000 impressions. Now, the calculations: $3.40 ⅹ 6,000 impressions = $20,400.
  3. Divide the result by 1,000. We divide $20,400 by 1,000 and get $20.4. The result we get is the total cost of the campaign. In this case, it’s $20.4.

However, if you’re dealing with email marketing, the calculations may not be that simple. The pricing often depends on the list. For instance, a targeted list with high open and click rates will have higher CPM rates.

Brands often implement email solutions offered by email vendors to ensure that their efforts are automated. The CPM price quote, in this case, will be based on the number of emails sent annually with possible monthly or per campaign billing.

Since every marketer is looking to effectively optimize email campaigns and achieve high ROI, it’s not uncommon to utilize email marketing tools like Phonexa’s E-Delivery as part of the all-in-one marketing automation solution for calls, leads, clicks, email, SMS, accounting, and more. Features like behavioral segmentation, multi-channel distribution, ESP integration, and split testing enable marketers to tap into their email marketing potential and control email data in a productive and dynamic way.

What Affects The Value Of CPM?

The lower your CPM rate is, the less your ads cost, and the higher ROI you get. That’s why reducing CPM is often a goal marketers strive to achieve.

Let’s look at some of the factors that influence the CPM value.

  • Theme and quality of website: The more segmented and homogeneous the audience is, the higher CPM a publisher can have.
  • Size of ads: Large and the most common ad formats typically have higher CPM.
  • Type of device: Since desktop ads still achieve higher CR and CTR than mobile, in-app advertising typically has lower CPM rates.
  • Data: Audience segmentation based on available data is critical to building user profiles and shaping CPM prices.
  • Seasonality: Brands and publishers need to understand the basic principles of traffic fluctuations due to specific seasonal changes in consumer behavior and during the upcoming holidays to successfully navigate changes in CPM rates.

Final Thoughts On CPM

CPM has an essential role in the marketing ecosystem. It is a valuable metric that enables marketers to assess the performance of ad inventory and determine how they can optimize the revenue stream.

If you’re looking to gain insights into the level of brand recognition, ad campaign performance, viewability, and identify the perfect approaches that can grow your audience, utilizing the right marketing automation tools and CPM advertising is your lucky ticket to success.

Source.

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