Cost per impression is a marketing metric that allows advertisers to evaluate the effectiveness of their campaigns. It is also called a cost per mille (CPM). Mille is one thousand from Latin. So, this measure allows you to calculate the amount of money to pay for 1,000 impressions.
In this article, you'll get to know why cost per impression is important, how to calculate it and get some tips to reduce the metric.
Why is CPM important?
Using a cost per impression, you can identify the amount of money to pay for one thousand impressions. Impression stands for an ad view. So, every time an ad appears in front of a user, it counts as one impression. This pricing model is typically used for Google, Facebook, and LinkedIn ads.
CPM is a valuable metric for marketers since it helps them understand the efficiency of this promotional channel. Besides, you can discover the top-performing channel for your business. If 1,000 impressions on Google cost you less than the same amount on Facebook, this channel suits your strategy better. Although, a low price doesn't mean success. Low CPM cost may be a sign of poor traffic quality. So, analyze each publisher before placing your ad on their platforms not to waste your budget.
Remember that the following factors influence the CPM rate:
- site topic (the relevance ratio of the site topic and an ad);
- site traffic;
- ad quality;
- a device, where an ad will appear;
- number of ads on a page;
- time of day.
A cost per impression metric is essential for startups and businesses releasing new products since it increases brand awareness and recognition. Placing CPM ads on relevant sites allows advertisers to speak to relevant audiences, thus increasing their campaigns' effectiveness.
If you have tested several ads with different messaging and identified one that had brought more conversions, you can use it with a CPM pricing model. It will ensure a higher ROI.
Now that you know the peculiarities and advantages of cost per impression metric, it's time to see a formula.
How to calculate cost per impression?
The formula is pretty straightforward.
CPM= (Total ad spending/Number of ad impressions)*1000
So, you need to divide your campaign costs by the number of ad views and multiply by 1000.
For example, you want to spend $100 and get 3,000 impressions on a relevant resource.
CPM = ($100/3,000)*1000
So, your CPM will be $33,3.
Remember that there’s no good or bad CPM rate since it’s different among businesses and industries. Still, if you’re looking for ways to reduce your spendings, check out the swallowing section.
How to lower your CPM?
We’ll share some tips which you can use to save your budget when working with Facebook and Google.
- Target your audience carefully. Each social platform and search engine cares for its users to have the best experience using it. So, the advertising algorithms work so that people are shown only ads they might be interested in. So, you should take Google Ads Quality Score and Facebook relevance score seriously. 10 points mean that you can perfectly meet your potential audience’s preferences. The higher the score, the less you’ll need to pay. Segment users by geography, demographics, interests, age, and other categories to create highly relevant and targeted campaigns.
- Set the right ad frequency. This step will help you prevent users from being annoyed by your ads. The best ad frequency is considered to be 3. It lets users remember and recall your brand when necessary. If more, you may seem intrusive. Besides, if users don’t engage with an ad when seeing it for the 4th time, it means that it is not relevant to them. As a result, your CPM rate with increase.
- Make use of social proof. People are eager to trust other people more than companies, especially when dealing with a new product. So, you can write in your ad that your product is recommended by a well-known opinion leader, used by established brands, or you can add some short testimonials from your loyal customers.
- Create a special offer. Social media users see hundreds of ads every day and never expect to get something really valuable from them. Break this stereotype and offer a deal people find difficult to refuse. Research your competitors and their offers to come up with something better. Your task is to engage users and bring them to your business. So, you can offer a big discount or a free trial.
- Create a lookalike audience on Facebook. This is a great chance to lower your cost per impression since Facebook wants to provide its users with the best experience. A lookalike audience means targeting people who share characteristics similar to your existing customers’ ones. If lots of your clients are from Australia, they are men of 35-40 years old and enjoy traveling, people having the same characteristics may also be interested in your company.
- Add a CTA. It seems pretty simple, but many advertisers forget to add it or don’t know which one to choose. As a result, people skimming the ad don’t know what they should do next and scroll down their feed ignoring your message. You should clearly state what users should do next. Engage them in communication with your brand. If there’s no CTA that fits your company, you can always choose “Learn more.”
- Increase your ad relevance score. We’ve already mentioned that search engines and social media want to meet their users’ needs, so they reward advertisers with a low CPM. So, the higher your score (10 is the highest), the less money you’ll pay. To get more points, you need to analyze your audience thoroughly. Let’s say, you are promoting your forest resorts. You will definitely target people according to their location and choose those who live near your resort. This might be a big mistake. Firstly, you should analyze the age and income of your typical clients. Your resort might be a premium offer which is probably not the best fit for young people. Besides, you should consider the interests of your audiences. So, take the ad relevance score seriously.
Congrats, now you know why the cost per impression metric is essential for marketers, how to calculate and lower it. So, follow our tips to create a relevant ad campaign for social media!
Last Updated: 22.03.2023
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