What is cost per mille (CPM)?

Cost per mille (CPM), sometimes referred to as cost per thousand impressions, is a programmatic advertising pricing model where advertisers pay a fixed rate for every one thousand times their ad is displayed to users/for every one thousand impressions received. 

One of many cost and pricing models, the cost per mille meaning is derived from a simple formula, making it easy for mobile marketers to measure the cost for every one thousand impressions (mille meaning 1000 in Latin) on a campaign-by-campaign or channel-by-channel basis. 

Let’s explore why CPM is important, how to calculate CPM (the CPM formula/equation), and the importance of CPM in digital advertising and app marketing.

In digital advertising, there are a number of cost models that marketers can work with to measure and optimize campaign performance and budgets. The cost per click (CPC) and cost per mille pricing models are two of the most common methods and formulas used. 

CPC offers a direct link between investment and specific user actions, making it ideal for campaigns focused on driving targeted interactions. This is why it's so popular in mobile gaming. CPM is more effective for visibility and brand awareness, making it the preferred option for campaigns aiming to reach a wider audience without necessarily driving direct downloads. The choice between buying clicks and paying for impressions depends on campaign goals and the measurability of their outcomes. The CPM price will be significantly lower than 1000 clicks would be, but conversion rates will be lower, or more complex to attribute. 

You may have seen the acronym ‘eCPM’ before and wondered how it relates to CPM, or what the difference between the two is. Effective cost per mille (eCPM) evaluates the revenue generated per one thousand ad impressions, considering not only the cost associated with ad display but also the profit gained through conversions. On the other hand, CPM exclusively measures the cost incurred per one thousand ad impressions. The formula you choose depends on campaign goals and how you are strategically measuring success. There’s also no downside to using both.

Sometimes referred to as cost per impression formula or CPM equation, the cost per mille formula is simple. Take the total cost of an advertising campaign and divide by the total number of impressions (ad views) and then multiply by one thousand. The result is the cost an advertiser pays for one thousand impressions of their ad. If an advertiser pays an ad publisher $2000 in budget and the ad drives 500,000 impressions, that means that the advertiser paid $4 for every 1000 impressions, or $4 per mille.

By reducing the amount of advertising spend while increasing the number of high quality impressions—or confidently increasing spend on channels that bring high-value users to your app—you can get a lot more out of every thousand impressions served. We’ve identified 10 key best practices to get the perfect balance between your cost per impression and the revenue those impressions result in. 

1. Optimize ad placements: Ensure that your ads are placed on the best channels and platforms for your target audience and segments. 
2. Target high-value audiences: Use precise targeting to reach audiences more likely to engage either directly or later in the user cycle, by demographic, geography, time of day, emotion, and more.
3. Invest in quality ad creatives: Better, more engaging ads, result in better and more engaged users. Make sure creatives demonstrate the value of your app while setting expectations accordingly. 
4. Incorporate video: Video ads have higher engagement rates and tend to convert better, especially on video-first platforms like social networks. 
5. Implement frequency capping: Limit the number of times an ad is shown to the same user to prevent ad fatigue and maintain brand reputation. 
6. Go programmatic: Work with programmatic ad platforms for automatic optimization of placements and ad delivery based on real-time data. 
7. A/B test: Experiment with different ad formats (banners, interstitials, native ads, etc.) to determine which generate the best CPM results by channel, platform, and segment. 
8. Allocate budget to retargeting: Depending on your app vertical, retargeting will play anywhere from a small to a huge role in your user acquisition strategy. Run retargeting campaigns to reactivate users who have previously interacted with your app, as they are more likely to convert, giving you better results per impression. 
9. Optimize seasonally: Adapting campaigns in line with seasonal trends and events will make your brand and app appear current while also creating a sense of urgency. The more your ads pop, the more of an impression they’ll make. 
10. Get data and analytics right: The only way to truly measure the impact of your campaigns, and the costs associated, is with unbiased, accurate data. This makes it essential for app marketers to work with a mobile measurement partner (MMP) to measure campaign performance.

 

Adjust’s Measure provides app marketers with the full picture of the user journey on all devices and channels. This ensures that advertisers can attribute installs and in-app engagements to impressions (i.e. where they were served/displayed and which network/exchange receives credit) to determine where they should be allocating budget. If CPM on one channel is very high and is not resulting in any attributions—or is not assisting other channels further down the funnel—it is likely worth shifting that budget elsewhere. 

Without accurate attribution, there’s the risk of overestimating the performance of one channel, which could be charging a lot for very little, or underestimating the performance of another channel, which might be delivering high-LTV users for a great CPM. Precise attribution means marketers can confidently rely on accurate, unbiased data when it comes to measuring CPM and CPM-driven campaigns. This allows fast, easy optimization of budget allocation and the ability to fine-tune strategies to enhance the ROI of an app’s overall advertising efforts. 

Learn more about Adjust’s ad spend reporting and how you can see all your spend data (including CPM, CPC, ROAS, ROI, CPI, and much more) insights in one place with Datascape. Or, request a demo today to learn how we can grow your app.