CPM network for advertisers - Ad network where you pay for impressions

CPM in advertising

What payment model should one choose for the ad campaign? There are many criteria to consider before answering this question. First of all, we would like to note that there are no bad models. There are just campaigns set up somewhat incorrectly.

To avoid making unfortunate mistakes, first of all, one needs to understand how each of the three pricing models works: CPC, CPA, and CPM. Let's start with the last one today.

What is CPM? — Meaning and features

CPM is an abbreviation of “Cost Per Mille”, meaning the price per thousand impressions of a banner, native advertising, or any other commercial format. That is, the ad will be shown to one thousand users of the website at a fixed cost.

Let us list some essential features of the CPM model:

— Every ad impression is recorded, regardless of whether the user clicks on it or chooses to ignore it. The cost of traffic going to the advertiser's website is calculated using another metric — CPC (cost per click). Do not forget though, that CPC can be both a pricing model and an additional evaluation parameter of the campaign if the payment is made via CPM or CPA?

— Ad clicks are free. Whatever the result is, it will not affect the costs. When launching a CPM campaign, the advertiser pays only for the impressions. The price does not depend on clicks or conversion numbers.

— How fast the budget is spent on the CPM model depends on the activity of the audience on the website or in the social network where the ad is placed. The more activity, the faster the ad gets impressions and spends money from the budget.

When to choose CPM?

The pricing model is not the only criterion for the success of an ad campaign. The choice of an advertising platform, creative templates, correctly made targeting, and many other nuances are extremely important here.

When choosing a pricing model, you should also start from a specific offer, budget, and advertising goals. The best way to decide is to test different models and evaluate the results. So that you will quickly and accurately understand which model is profitable for you. This will allow you not to throw the budget away in the future.

However, despite the above, it is always safe to say that the CPM pricing model is:

— A great option for a beginner in launching ads or for a campaign with a limited budget. Regardless of the results of the campaign, the amount spent on it is not going to change. By choosing CPM, the advertiser does not risk anything. After analyzing the results, you can decide whether to increase the budget or change the payment model to a more profitable one for future campaigns.

— A suitable pricing model for those cases when it is necessary to convey information to a wide audience: to tell about a new product or service, to arouse public interest in an upcoming event, to increase brand awareness, to popularize a trademark, etc. Payment for impressions only is also a wise choice for informing customers about discounts, promotions, sales, and other loyalty programs. The effectiveness of such ads usually depends directly on how often they are shown to the user, so choosing a CPM model makes perfect sense.

— The most justified payment model for some specific advertising formats. That's right: there are some formats that initially imply only the display of advertising. One of them is a Popup (Popunder). Despite the stereotypes about the aggressiveness of such formats, they often show a high CTR and a large number of conversions. The latter is highly dependent on the pre-landing page shown to the user.

How to calculate CPM?

The classic formula for calculating the cost of 1000 impressions uses only two indicators. The first is “advertising expenses” — the price of placing an ad in some web source, for example, in our advertising network. The second one is “total impressions” — the expected or actual number of views of the ad by the target audience.

So the CPM formula is as follows:

CPM = (Total advertising expenses / Total Impressions) * 1000

Let's try to calculate the CPM using this formula in a more specific example. Imagine that the cost of publishing an ad for 7 days is $100, which is "total advertising expenses". During the week that the ad was placed on the website, it was shown to users 200,000 times — the number of "total impressions". We substitute the available numerical values for the formula specified earlier, and by simple calculations we get:

CPM = (100 / 200,000) * 1000 = 0,5

As a result, the CPM is $0,5. This means that for every thousand impressions of an ad, 50 cents will be paid.

What is a good CPM?

Unfortunately, there is no clear answer to the question "What CPM is considered good?". Here it is not necessary to focus on one specific figure or absolute values. A good price per thousand impressions will vary depending on the advertising format, vertical, geo, your overall advertising tactics and, most importantly, the goals of the advertising campaign.

In recent years, it has become clear that in the CPM pricing model, quantity is not necessarily directly related to quality. Many advertisers strive to get as many cheap impressions as possible at a price below $1. This is feasible, but such an approach is not always the right one. If the goal of an advertising campaign is to attract the target audience and potential customers, and their interaction with advertising means something to you, then it will cost more to get better traffic.

CPM interacts directly with CTR. The fewer mistargeted views an ad collects, the cheaper the clicks are. Accordingly, you save your budget and get more leads, conversions, and sales.

So, we can draw the following conclusion: test different CPM Rates, evaluate the results, and look at the key indicators such as CTR and ROI. Only then can you tell whether your CPM was good or bad.

And of course, don't forget to use the "traffic estimator" tool on our Self-Service Platform to make it easier for yourself when launching a CPM campaign.

Why is my CPM so high?

For a poorly planned campaign, the cost per 1000 impressions can reach $20 and more. This is obviously not the most desirable result for an advertiser. There are two most common reasons for the CPM rate getting too high: time targeting and the target audience which is either too narrow or too wide:

— The time of impressions is as important as their number. In primetime (for example, 19:00), a whole lot of advertisers are competing at the auction, so the bid absolutely has to be increased. By creating a campaign early in the morning or late at night, one gets a chance to have a significantly lower CPM. But also, do not forget about the different time zones when launching campaigns on several geos.

— By expanding the target audience, a lower CPM might be easier to get again. At the same time, it is important to keep in mind that the lack of personalization will reduce possible conversions as well. What we can once more repeat here is that you should always try different options and do tests to see what actually works for your campaign.

Came across any questions or difficulties when launching a CPM campaign? Please, do not hesitate to contact the Galaksion managers. They will be happy to help optimize the campaign and save your budget for potential growth.