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what is CPM, how is it calculated and in which cases to apply it?

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A fundamental part of digital marketing is paid advertising. In order to carry out your campaigns successfully, it is necessary to calculate and measure the actions you carry out, because what you don't measure cannot be improved.

Today we tell you all about the CPM or cost per thousand impressions, one of the main metrics for SEM. Read on so you don't miss anything about this topic!

what is CPM?

CPM or cost per thousand is an online advertising model where the advertiser pays each time the ad is shown 1000 times, regardless of whether users have clicked on it or not.

The difference with other forms of advertising, you pay when 1000 impressions are reached, and most importantly, the user does not need to click on the ad link, they only need to see it for it to count.

The main objective of doing a campaign using CPM is to create notoriety on the internet, a quick way for users to know about the existence of your brand, products or services. It is not so important to generate traffic to the web, the main thing is that people see it and know about your existence.

how is it calculated?

As with everything in digital marketing , in order to guarantee the success of the campaigns it is necessary to calculate the actions, because no advertising is left to chance.

The formula to calculate the cost per thousand is very simple:

(Cost / Impressions) x 1000

Let's show you a more visual example to make it easier to understand. Imagine you have paid £20 for 4000 impressions, then the calculation would be as follows: (20/4000) x 1000 = 5

The CPM is 5, which means that for every thousand impressions your ad costs £5. And if you want to know how much each impression costs, it is easy, since it is the division of 20/4000, that is, you pay £0.005 each time a user sees your ad.


when to apply the CPM?

At the beginning we mentioned that this is a model that is usually applied to campaigns that seek to generate notoriety and presence on the internet, the main objective is not to bring traffic to the website, generate leads or a conversion by the user.

Therefore, if your objective is to create notoriety, then you should apply this CPM or cost per thousand model, so that users see your ad when they browse the internet.

Like other payment models, such as CPC or cost per click or CPA or cost per acquisition, it is not better or worse, it is applied depending on the needs and objectives of your company.

Advantages and disadvantages of CPM

We have already mentioned that there are no good or bad advertising models, some are simply adjusted to some objectives or others. If your goal is to generate leads, then the CPM is not of much use, while if you want your brand to be known or any of your products, then if you want to apply this model, then you are interested in applying this model.

Among its benefits is that it is a profitable model, usually the cost per impression is low, and the initial investment is not high. It is ideal for companies that are starting out, looking to be known quickly and do not have a high budget. It is also very advantageous for launching a new product or service, usually when you launch something new to the market you want to make it known as soon as possible. Thanks to the cost per thousand, you can create a campaign that allows you to flood the web with this new launch.

But like everything else, there are disadvantages, such as the fact that it is a more invasive advertising model than others, since you are showing an ad that the user has not asked for. In addition, with the CPM it is difficult to measure the real impact of the campaign, that is, the fact that the ad is shown does not mean that the user has paid attention to it. And another disadvantage to take into account is that linking the CPM with the ROI is difficult, since you are not looking for the user to perform a specific action, such as a purchase or leave their contact details, simply that they see the advertising.

In conclusion, this type of advertising campaign will give you visibility on the web for a low cost, so we recommend it if you want to position your brand or products, or simply make yourself known.

Now you know what is the cost per thousand or CPM, how to calculate it and in which cases it is best to apply it, we encourage you to examine if this model fits your objectives and apply it in your company.

Like other methods of advertising on the Internet, this one is adjusted to specific needs, so if your main objective is to make yourself known, we encourage you to use it and calculate it. If not, we hope we have solved your doubts.

we hope you enjoyed the reading!

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