Cost per mille (CPM) is a pricing model used to indicate the cost of displaying an ad on a mobile device. CPM is often used to measure the effectiveness of mobile advertising campaigns, as it allows advertisers to compare the cost of reaching a thousand users on different mobile platforms or through different ad formats. CPM is commonly used in mobile advertising to charge for display ads, interstitial ads, and video ads.
CPM allows marketers to measure the effectiveness of their campaigns. By comparing the CPM of different campaigns, mobile marketers can determine which campaigns are performing the best and which are not. Then mobile marketers can make adjustments to their campaigns as needed to improve their performance.
In addition, mobile marketers can make informed decisions about where to allocate their advertising budget by understanding the CPM of ad campaigns. For example, if a mobile marketer finds that their CPM is higher on a certain mobile platform, they may choose to allocate more of their budget to other platforms where the CPM is lower.
CPM can be calculated by dividing the total cost of a campaign by the number of impressions and then multiplying that by 1,000. The formula for CPM is:
CPM = (Total Cost of Campaign / Number of Impressions) x 1,000
For example, if an ad campaign costs $1,000 and generates 1 million impressions, the CPM would be calculated as follows: ($1000 / 1,000,000) x 1000 = $1.
Cost per click (CPC) is a pricing model that indicates the cost of an ad campaign based on the number of ad clicks. It can be measured by dividing the cost of a campaign by the number of clicks it receives. Marketers use the CPC model to only pay for the users that clicked on their ad, making it a great option to drive conversions. CPC is commonly used in search engine and social media advertising, where a user must click on the ad to be directed to the app.
CPM is focused on ad impressions, not clicks. CPM is commonly used in display advertising, where the goal is to reach a large audience and create brand awareness rather than driving a specific action like sales.