*to use the calculator zero out the number you are looking to calculate. Add in the two metrics you know.
What is CPM
CPM means cost per mille or cost per thousand. It is a common measure in online marketing used mainly in paid social media ads. The cost per thousand covers the cost per thousand impressions on a paid ad.
For a display ad, Google counts an impression as:
- At least 50% of the ad is visible
- It is visible for one second or longer
- Video is 2 seconds viewed or longer
How to calculate CPM
To calculate impressions using CPM divide total spending by the number of impressions. You can also get the other equation values like total cost of campaign = total impressions ÷ 1000 x CPM.
CPM = Total Campaign Spend ÷ Number of Impressions X 1,000
For example, If you had a $1,000 ad spend on Facebook with 750,000 impressions times 1000 you would have a cost of $1.33 per thousand impressions for your ads.
How to calculate Number of Impressions
Calculating the number of impressions you want for your ad or have available is also an important metric. If you have an audience of 1000 people you need to multiply this audience by the frequency you want them to see the ad at.
Impressions = Audience Size x Frequency
For example, if you have an expected target ad size of 100,000 and wish to show each person your ad 7 times you will need 700,000 impressions.
In our original calculation that is:
CPM = $1,000 ÷ 700,000 x 1,000 = $1.43
Note: If your CPM is very large like $142 you likely need a larger audience. Remember CPM is for broad awareness and looks for the most impressions.
When Should You Use CPM Over CPC
CPM is the best way to calculate cost on display ads, video ads, and when you are using awareness or reach as a goal or objective. When using CPM remember the goal is not to get clicks it is more about having as many people view your ad as possible. If you are looking for a better click-through or to increase your site’s traffic cost per click (CPC) may be the better option for you.
Why does CPM matter
CPM is important because it compares the cost of views for different ads. You can also use CPM to help you decide how much you need to spend on a certain campaign to get the results you are looking for.
It is not suggested to rely solely on the CPM metric but CPM is a great way to start a broad campaign that creates interesting audiences especially on the Facebook platform. We use CPM in the house to decide how much to spend on targeting ads to cold audiences to introduce a product, service, or brand.
What is the average CPM
CPM depends greatly on the audience size you have the more targeted your audience is the higher your CPM is. We see an average of $2 – $5 per CPM when using large broad audiences. When your audience is small or defined it would not be uncommon to see a CPM closer to $15.
It’s important to look at your numbers based on your individual client, audience size, and industry. If a more defined audience is better for your ads it is more important to hit the frequency of views over a specific CPM.