Creating that awareness is the first step on the customer journey, which is what makes your digital marketing efforts all the more important. How you approach marketing for your business is crucial, which is why you need to consider all of the marketing strategies at your disposal and, most importantly, the cost of executing those strategies. This is where it can be helpful to familiarize yourself with what CPM is and how this pricing model is used in digital marketing.
Various forms of advertising and advertising pricing models exist. However, one of the most common pricing models in digital marketing is CPM. The acronym, CPM, stands for cost per mille, with the Latin and old French word ‘mille’ meaning a thousand. For this reason, you will often see CPM referred to as cost-per-thousand. More technically, CPM represents the cost a marketer will pay for every one thousand impressions of a digital ad.
Cost per thousand is one of the pricing models marketers and businesses can leverage in several ways. Not only is it important to understand the use cases for CPM advertising, it’s also important to understand how CPM works. CPM can be a great tool for businesses and anyone who wants to advertise their service or product.
What does CPM mean in marketing?
In digital marketing, CPM refers to what an advertiser pays for 1,000 impressions of an advertisement on a web page. What is important about CPM marketing when it comes to digital marketing is understanding the meaning of an impression. An impression means the ad, as an element of a web page, loaded and received a view. This isn’t the same as a page view.
Impressions vs. page views
You can often find the terms page view and ad impressions used interchangeably. While the two are similar, they are still different metrics. A page view occurs when a web page loads on a user’s browser and that user clicks through to another page.
By contrast, an impression indicates that an element of the page, such as an ad, loaded and appeared for the user to view. Depending on the advertising platform used and options chosen by the marketer, impressions can vary a great deal.
For example, each time a new user comes to a particular page on a website, they increase the page view count by one. However, the same advertisement may not show up each time for all those visits, so the impression count will not match the page view count.
Both these metrics have value for businesses and marketers. These metrics are also important for publishers who want to increase website traffic.
The importance of click-through rate (CTR)
CTR, or click-through-rate, refers to the number of clicks an advertisement receives from its impressions online. The formula for CTR is the number of clicks divided by the number of impressions. Multiply the result by 100 and you will see your ad’s click-through-rate.
The CTR can tell marketers and advertisers how well or poorly an advertisement performs, which is what makes this rate so important. You can use it, especially in conjunction with other metrics, to measure not just overall performance, but smaller things as well, such as copy effectiveness or if the title works well for the ad.
CTR also gives insight into how to proceed with a digital marketing campaign. For example, a very low click-through-rate can mean several things. Maybe the ad isn’t targeting the right people or perhaps the ad isn’t on the best websites or in the best position. Alternatively, the CTR can show that a targeted keyword or advertisement is working and can possibly do even better.