Cost Per Thousand Impressions

What is Cost Per Thousand Impressions?

Cost per thousand impressions is an important metric in the world of advertising. It is also known as cost per thousand Mille or CPM in short, where the letter M stands for the Roman numeral 1000. For the record, Mille is also the Latin word for thousand.

CPM is the price that a marketer has to pay for 1000 impressions on a webpage. By impressions, we mean the number of views that a particular Ad receives. Impressions are also known as Ad views. Cost per thousand impressions is one of the most common techniques used in digital marketing for pricing an Ad. Website owners are paid a certain fee for every thousand impressions that an Ad gets.

As an online seller, CPM is an effective metric to gain visibility for your ecommerce store.

As per reports, ecommerce brands enjoy lower CPM at the beginning of the year (in January) giving them tons of opportunities to start the year on a great note.

How do you calculate cost per thousand Impressions for your ecommerce business?

Let’s get one thing clear - impressions do not indicate if an ad was clicked on. It is the CTR or Click Through Rate that measures whether an ad was clicked on, denoting the percentage of users who view the Ad and go on to click on it. However, CTR is often calculated along with CPM to measure the success of an Ad campaign.

To calculate CPM, there are few important pieces of information that you will need to gather.

First, you need to determine the total cost of your campaign. You then need to arrive at the total number of impressions or the number of views that your ad has received. Divide this by 1000. For E.g., if your ad was viewed 20,000 times and you divide it by 1000, the result you get will be 20.

To arrive at your CPM value, you simply need to divide the total cost of the campaign (determined in the first step) by the result you obtained on dividing the total Ad views by 1000.

Here is the formula to calculate CPM:

CPM = Total cost of the campaign ÷ (Total no. Of Impressions ÷ 1000)

How could measuring CPM be useful for your online store?

Marketing is crucial to the success of all ecommerce businesses. Without online marketing, it’s doubtful if your website will garner the kind of traffic it requires to rank high in search results

If you aren’t generating enough traffic, then it’s likely that your sales are low. With CPM, you get to calculate the impressions each of your Ad platforms get. If you notice that you aren’t getting as many impressions as you thought you would on a particular platform, then you need to alter your strategy a bit to improve that number. This would eventually lead to increased brand awareness and higher conversions on the whole.

Here are a few more ways in which an ecommerce business stands to benefit from a CPM model of advertising. 

  • It is a form of low-cost branding. CPM campaigns turn out to be much cheaper than traditional forms of advertising like TV, newspaper, or radio. You will know the exact number of views you’ve got on an ad and you will know if you’ve made a wise investment.
  • It creates more visibility. This is a great opportunity for new online stores that want to create a place for themselves in the minds of potential customers.
  • With CPM advertisers can have better control.

How to reduce the CPM of your ecommerce business?

Here are a few tips to reduce CPM and convert impressions to sales:

  • Segment your audience well: The more accurate your audience segmentation is, the more successful your Ad is as they are reaching out to the right audiences.
  • Create Ads that are tough to ignore: Grab user attention with compelling and persuasive Ad copy, include videos and GIFs in your Ad as they have been proved to be more appealing. Have a good CTA, inviting users to take the desired action.
  • Create different versions of your ad for different devices: Ensure that your Ads are suitable across all screens that they will be displayed on. Always optimize ads and create not just for the desktop, but mobile-friendly versions of it too.

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