How is the CPM calculated?

The CPM (Cost Per Thousand impressions) is calculated by dividing the total cost of an advertising campaign by the total number of impressions, then multiplying the result by 1,000. The formula is therefore CPM = (Total cost / Number of impressions) × 1,000.

What is CPM and why is it important?

The cost per thousand impressions (CPM) is a key indicator for advertisers wishing to optimise their advertising campaigns. It is used to measure the cost of display advertising per 1,000 impressions and to adjust expenditure according to the visibility achieved. However, mastering the CPM calculation and knowing how to optimise it is a challenge. 

Definition and role of CPM in digital advertising

CPM in marketing (cost per mille) is a pricing method where an advertiser pays for 1,000 impressions of its ad on an advertising medium. Unlike billing models based on interactions, such as CPC (cost per click), CPM takes into account only the display of the ad, regardless of user engagement.

This model is particularly popular in advertising when a company wants to promote its brand. It is widely used on social networks, display advertising platforms, online advertising and digital signage campaigns.

Find out more about the cost of display advertising in our dedicated article.

Differences between CPM, CPC and CPA

To fully understand CPM, it is important to compare it with the other pricing models:

CPM (Cost per thousand): you pay for 1,000 impressions of your ad.

CPC (Cost per click): you only pay when someone clicks on your ad.

CPA (Cost per Acquisition): you pay when the user carries out a specific action (purchase, registration, etc.).

The choice between these models depends on your objectives: CPM is ideal for improving brand awareness, while CPC and CPA are better suited to campaigns focused on conversion.

How is the CPM calculated?

The CPM calculation is based on a simple formula:

CPM = (Total cost of campaign ÷ Total number of impressions) × 1,000

This enables advertisers to assess the price of advertising in relation to the visibility obtained.

Concrete example of a CPM calculation

Let's imagine a company that invests €500 in an advertising campaign and obtains 200,000 impressions.

The CPM is then calculated as follows

CPM = (500 ÷ 200,000) × 1,000 = €2.50

This means that each 1,000 impressions costs €2.50.

Rather than doing this calculation by hand, you can use free tools such as Omni Calculator's CPM calculator.

Why can CPM be an obstacle for some companies?

Although widely used in digital advertising, CPM can pose challenges for some companies because of its sometimes high cost and lack of precision in terms of targeting. 

This model of buying advertising space can lead to significant expenditure without guaranteeing any real commitment on the part of the target audience.

High cost, uncertain profitability

While the CPM model can increase visibility, it does not guarantee a good conversion rate. A study by Publift reveals that the average CPM can exceed €10 in the most competitive sectors, making customer acquisition costly.

A poorly optimised marketing campaign can quickly see its budget explode without any real impact on sales. That's why it's essential to calculate the ROI on marketing campaigns before choosing this model.

The challenge of targeting to avoid unnecessary impressions

A high CPM does not necessarily mean that your advertising is performing well. If your targeting is too broad, you run the risk of paying for impressions seen by uninterested users.

To avoid this problem, we recommend that you :

Refine your audience using demographic and behavioural criteria.

Test different advertising platforms on social networks and display advertising.

Adjust your strategy according to the kpi of your marketing campaign.

Innovative strategies to optimise your CPM

Faced with rising advertising costs, it's becoming essential to adopt innovative strategies to optimise your CPM while maximising campaign performance. AI and new advertising formats now offer opportunities to improve targeting and reduce your expenditure.

The impact of AI and machine learning on CPM optimisation

Artificial intelligence is revolutionising online advertising by enabling advertising bids to be optimised in real time. Using machine learning, algorithms continuously analyse the behaviour of Internet users and adjust the delivery of ads to reduce the CPM.

According to a study by Statista, more than 80% of online advertising will be purchased automatically by 2025.

How to optimise CPM calculation to make your advertising campaigns more profitable

Mastering the CPM calculation is therefore essential for optimising your advertising campaigns and avoiding wasting your budget. 

While this model is ideal for increasing brand awareness, it requires a strategic approach: precise targeting and innovative formats can significantly reduce the CPM while improving the impact of your ads.

By continually testing and adjusting your campaigns, you can maximise your return on investment and achieve your marketing objectives effectively.