What is CPM? How to Calculate Cost Per Thousand Impressions?
The world is becoming more and more integrated with technology every day and when this is the case, we are faced with technology in almost every field. Advertising is just one of these areas. Advertising spending in the global world has doubled in the last four years. We are so used to seeing ads on every website we visit. The online advertising industry is also growing day by day. Pricing models used in this type of online advertising are also followed with interest. In this article, we searched for questions about CPM , which is one of the pricing models in the online advertising industry
Advertising can use almost any type of media to meet their needs. Broadcast media such as print, television, radio, cinema, outdoor, mobile and digital were all targeted by advertisers. Global ad spend has been increasing steadily since 2010 (excluding 2020), and in 2021, worldwide digital ad spend was calculated to be $521.02 billion. The source predicted that by 2026, spending will reach $876 billion. As of 2020, the internet, considered the most important medium for advertisers, accounted for 51 percent of total media ad spend in 2020.
Advertising spending in the Digital Advertising market is estimated to reach US$ 616.00 billion in 2022.
The largest segment of the market is Search Advertising, with a market volume of $260.00 billion in 2022.
In global comparison, most of the advertising spend will be in the United States ($261.10 billion in 2022).
Average ad spend per user in the Search Advertising segment is estimated to be $50.94 in 2022.
In the Digital Advertising market, 69% of the total advertising expenditures will be realized through mobile in 2027.
In the Digital Advertising market, 89% of Digital Advertising revenue will be generated from programmatic ads in 2027.
What is CPM?
CPM stands for 'Cost Per Mille' and stands for Cost Per Thousand Impressions (CPM) in Turkish . CPM, known as digital marketing and digital advertising terms, is the determination of how much brands will pay for the advertisements they publish to promote their products or services. In other words, it is also known as the cost paid by the advertiser or institution to view the advertisement a thousand times.
CPM is known as one of the most popular pricing methods used in online advertising. It is a calculable and measurable value. The bid amount is determined for each 1000 impressions purchased. After this amount is calculated, the determined amount is paid per 1000 impressions.
In order for it to be viewable according to targeting in the CPM model, half of the ad in question must have been viewed by users for at least 1 second. This is an important detail that should not be forgotten for the CPM model.
Why is CPM Important?
CPM has an extremely fair system for advertisers. Once advertisers decide how to pay with CPM, they simply offer what they receive. In other words, the places where the advertisement, which is considered as a service, will be published, do not demand payment before the ad impression exceeds a certain level. In this case, businesses or individuals that advertise will not be victims.
CPM provides much better delivery of ads. It aims to maximize ad views. The purpose of the CPM model is to ensure that the advertisement reaches a large number of people. In addition, it provides an easy calculation of the cost of each thousand users who can access the advertisement, that is, see the advertisement.
CPA vs. CPC vs. What are the CPM Differences?
1. CPM is just one of the online advertising pricing models. CPA AND CPC are also known as other online advertising pricing models.
2. CPC stands for 'Cost Per Click'. Here it is important that users click on the ad. In other words, the cost is evaluated as per click, not per impression like CPM.
3. CPA, on the other hand, 'Cost Per Action' is another type of pricing that changes depending on users' clicking on the ad and making purchases through the ad.
In CPA and CPC pricing type , unlike CPM, it is important not to view, but to click on the ad and make purchases through the ad. Pricing varies based on users' actions.
How is CPM Calculated?
When calculating the CPM cost, first of all, how many impressions and the basic cost of the advertisement are taken into account. The number of impressions and cost of the ad are calculated proportionally.
The total cost paid for the ad is divided by the number of impressions and multiplied by 1000. The formulated version of this is expressed as CPM = Cost / Number of Impressions x 1000 .
CPM is a proportional calculation system and is therefore often preferred. With this calculation, a fair distribution takes place and you are sure that no money you pay is wasted. The impression you get changes the cost.
In this case, the CPM value is also of great importance for the sites that show the advertisement, that is, sell it. The reason for this is that the impression value is directly proportional to the popularity of the website. This situation directly affects the price. So if you're a website owner, the more impressions you get, the more ads you can sell.
Considerations When Calculating CPM
One of the most important points to consider when calculating according to the CPM model is to calculate according to the currency of the advertised platform. Otherwise, the error in the calculations may lead to financial losses.
You must select the 'Display Network only' bid strategy when targeting campaigns . Accordingly, when you create your campaign, your bid strategy will go smoothly.
Two types of targeting are possible when using the CPM bid strategy. These are known as 'Ad Group Bidding' and 'Settlement Bidding' . With these fields, you can provide separate bids for each settlement, and you can easily control and provide all targeting from a single place.
