Cost Per Mille (CPM)

CPM is a metric that calculates the cost of 1,000 ad impressions.

Why it matters

Helps in budgeting and forecasting ad spend.
Allows comparison of cost efficiency across campaigns.

How to measure

Divide total ad spend by total impressions, multiply by 1,000.
Typically measured over campaign duration.

Details

CPM is a fundamental metric in mobile advertising, providing a standard way to measure the cost-effectiveness of ad campaigns. It is particularly useful for brand awareness campaigns where the goal is to reach a broad audience. Mobile engineers and growth teams can leverage CPM to optimize ad placements and budget allocations. Understanding CPM helps in negotiating with ad networks and ensuring that ad spend aligns with strategic goals.

In a mobile context, CPM can vary significantly based on factors such as the target audience, ad format, and platform. For example, video ads may have a higher CPM compared to static banners due to their engaging nature. Monitoring CPM trends over time can provide insights into market dynamics and help adjust strategies accordingly.

Examples & formulas

To calculate CPM, use the formula: Total Ad Spend / Total Impressions * 1,000. For instance, if you spend $500 on a campaign that receives 100,000 impressions, the CPM is $5.

CPM = (Total Ad Spend / Total Impressions) * 1,000

Common mistakes

Ignoring engagement metrics; CPM doesn't account for user interaction.
Overlooking audience targeting; high CPM might not mean effective reach.