What Is Cost Per Mille?
Cost per mille (CPM), using the Latin “mille” instead of thousand and also known as cost per thousand, is a marketing technique used by advertisers and web developers to configure how much ad space will cost. It is the amount an advertiser pays a website every thousand times a brand’s ad is shown. An impression is when the ad is displayed, whether the user clicks on the ad or not. The cost per mille is calculated by taking the total cost of the ad campaign and dividing it by the number of impressions (in thousands) to determine the number of clicks an advertisement has received. The calculation is 1000 x total cost (or budget) / impressions)
Why is cost per mille important?
With many different marketing options online, cost per mille is a simpler method for running ads at a consistent cost. It also provides an estimate for how many users will view the organization’s ad. The main purpose of cost per mille is to define the cost of ad space. Organizations and advertisers can optimize their cost per mille by tracking digital marketing metrics, improving ad campaigns, and ensuring proper ad placement to reach the intended audience. Tracking these metrics along with the CPM can prove to an organization how efficiently their advertising budget is being used, and whether the intended viewers of the advertisement are being reached.
How is cost per mille used?
Cost per mille works by charging an advertiser on every 1,000 impressions received on the ad. There is not a set cost per mille because costs can vary depending on ad size, demographics, and website the ad is placed on. This method is regularly used in mobile app advertising due to ease. Traditional cost per mille is not based on outcomes, meaning as long as the ad is on the page, whether clicked on, viewed, or not, it counts as an impression. Newer methods like cost per engagement and cost per completed view are emerging and require user interaction. With cost per engagement advertisers are charged when action is taken past viewing, whether it be playing a small game or taking a survey. These can be more expensive, but do offer the benefit of increased initial action from the user.
Cost per mille FAQs
How does cost per mille work? Cost per mille is a method of charging advertisers for their ads. It is based on every 1,000 impressions an ad receives and payment is built off of that.
How do you calculate cost per mille? Cost per mille is calculated by taking the total cost of the ad campaign and dividing it by the number of impressions (in thousands). This will then show the potential number of users who could have seen this ad.
What is a reasonable cost per mille? Ads vary greatly in cost because of size, demographic, and websites they are displayed on. Ads can begin as low as just a few dollars, but quickly increase as a wider audience is reached and ads are more viewable.
Who uses cost per mille? Cost per mille is used often in mobile app marketing and is used by marketing departments and advertisers.