SEM 101: How to Calculate and Evaluate Your Cost Per Mille
CPM in full is the Cost per Mille. ‘Mille’ here represents the roman number for 1000. Thus, CPM is the amount of money that an advertiser pays per every thousand impressions on an ad.
For instance if the cost per mille is $5.00 then for every 1000 views or people are exposed to the ad, an advertiser has to pay $5.00.
CPM search engine marketing is a form of calculating payment, like the Pay per Click (PPC).
The difference is that for CPM is that the advertiser has to pay for every single view, even those that do not lead to clicks.
Who Uses Cost per Mille Search Engine Marketing?
Cost per mille is usually used by media networks such as on radio, television, newspaper and magazines.
It is used by advertisers on these media as a way of telling whether the ads are cost effective or not.
They can therefore either go ahead with the campaign or find another strategy from this information.
Apart from media networks, CPM is also used in online advertisements. It is used in other networks such as Google Ad Words, and other PPC (Pay per Click) networks.
It works best for awareness creation for a new product, so that people get familiar with it, Branding campaigns, that is as a way of selling one’s brand to be remembered and for the kinds of products that have a large market, with many people interested in it.
The reason why it would work better for such kinds of advertisements is because the advertisers pay for each view.
For advertisers whose main goal is to achieve more clicks, this may not work as well as for that whose goal is exposure.
Such campaigns put your brand out there for the viewers, and it will remain in their conscience. This makes CPM more valuable for these advertisers.
Calculating The Cost Per Mille
As an advertiser, you will need to be able to know how much it is costing you to run your campaigns, so you can budget for them and find the best way to run the campaigns for you.
You will be able to tell how effective your campaign is and is it worth the amount spent on it?
CPM is funny because you may spend a lot while another spends less, and yet have the ads of the the one who spends less being more effective, especially if the CPM is lower. So how do you go about calculating the CPM?
1. Sum up all the expenses you have on the ad you have. Have every expense, including how much it cost you to produce the advert, show it on websites and any other thing you spent money on concerning the ad. Let’s have a figure, and say your ad cost you $15000 in total.
2. Find number of ad impressions for that specific ad. Get how many times your ad was exposed to viewers, how many impressions in total you have for that ad. For the ad costing $15000, let’s say the total ads were 200,000.
3. Divide by 1000. Remember it is the cost per thousand impressions, thus to get how many times your ad viewership reached 1000, you divide the total number of views by 1000. For our case, the answer will be 200.
4. Back to the first figure, have the total cost and divide it by the answer you got in the 3rd step. This gives you the figure of how much you have actually spent for your ad. If we divide our figure with the answer on step 3, we get $75.
Such calculation allows the advertisers to find out how well the total costs are working for them when broken down into smaller units, as compared to just counting the total cost.
It determines how well using cost per mille works for the company, and whether to stick with that method or move onto other methods. Advertisers that use this method can make better informed decisions.
The lower your CPM the better for you as a company, as it is cost effective for you, especially if you find a site with a lot of views. This type of cost measurement may actually be more cost-effective than the more popular pay per click.
CPM marketing is used in different sectors within the internet. It may be used for Google, YouTube and even Facebook.
You can be able to place your ads on any of these sites using the cost per mille form of measurement to calculate costs and make payments.
Together with CPM, it is also important to measure the Click through Rates (CTR) for an ad. You may be paying for ad campaigns that are not very effective as people simply pass the ad, completely ignoring it.
CTR shows you how many clicks you are getting. You can get the click through rate by calculating number of clicks for every thousand impressions.
You do need to have click-through for better success of your ad. This does not mean that ads with fewer clicks have not made a difference for the viewers.
To tell if an ad was a failure, there are other measurements that should be used together with CPM and CTR.
Refining Target Audience
This is an important step in making your ads more effective. Narrowing the kind of audience you want to view your ad according to demographics ensures that your ad is viewed by those who will be more likely to relate with it.
More people who have an interest in what you have to offer would result in higher click through rates.
This coupled with the high number of impressions results in more effectiveness of your ad campaign. Though it may increase Cost per Mille, it is valuable to your campaign in the long run.
Earning from Cost Per Mille
People do make money from CPM. An advertiser pays to have their ads displayed on a website, thus if you run the page or site, the advertiser would make these payments to you, and have you display their ad on your website.
To be successful in CPM marketing, you will need to first have good quality content on your site.
Whether it is a blog, vlog or any other website, the content must be of good quality to attract a larger audience and potential advertisers as well.
You will also need to have a very large following. Your access to potential clients is what makes you attractive to the advertisers.
The more you have the better, as an advertiser pays more when the viewers of his or her ad are more.
Depending on the host of your site, how much you earn may vary. The CPM isn’t always equal to how much the marketer earn.
Sites like YouTube usually take off a percentage of the CPM while you receive the remaining amount. You need to find out all information before venturing into CPM marketing for income.
CPM search engine marketing has the potential to take your digital marketing campaign to a higher level.
Use this measurement of costs and ensure that the cash you use is well within your budget and that none is misused. Take the leap. Try out CPM