Cost Per Impression (CPM) is the cost an advertiser pays for 1,000 marketing impressions. CPM is calculated by dividing the total cost of marketing campaign by the number of impressions. For example, if an advertiser spends $500 on a marketing campaign that generates 50,000 impressions, their CPM would be $10.
Impressions are generally measured by website pageviews or ad views. For example, if an ad is seen 500 times, that would count as 500 impressions.
CPM is a useful metric for advertisers to track because it allows them to compare the cost of their marketing efforts across different platforms and channels. For example, if they find that their CPM on Facebook is $5 and their CPM on Twitter is $10, they may decide to focus more of their marketing efforts on Facebook.
CPM can also be used to compare the effectiveness of different marketing strategies. For example, if an advertiser is trying two different ad campaigns and one has a CPM of $5 while the other has a CPM of $10, the first campaign is clearly more effective.
Despite its usefulness, CPM is not without its limitations. One issue is that it does not take into account whether or not people actually see or pay attention to the marketing impressions. Just because an ad is seen 1,000 times does not mean that it will have any impact on viewers. Another limitation is that CPM does not account for click-through rate (CTR) or conversion rate. marketing campaign with a low CPM but a high CTR may actually be more effective than a campaign with a high CPM but a low CTR.
Overall, CPM is a useful metric for advertisers to track, but it should be used in conjunction with other metrics such as CTR and conversion rate to get a complete picture of the effectiveness of a marketing campaign.