Internet Marketing

# 5 Second CPM Calculator

If you’re a marketer or a business owner, you know the importance of digital marketing. It’s an effective way to reach millions of people, and can lead to tons of new leads and revenue. But how can you tell if your digital marketing campaign is set up in a cost-effective way? If you’re using CPM advertising, our CPM calculator can help.

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## How do you calculate CPM?

In order to calculate your CPM, there are a few crucial pieces of information that you need.

First, you will need to determine how many impressions your ad will recieve, or how many times your ad will be viewed. You will also need to determine the price of the ad.

You will then need to divide your total number of impressions, or ad views, by 1,000. For example, if your ad is viewed 30,000 times, when you divide that number by 1,000, the result is 30.

You will then need to divide the cost of your ad, determined in the first step, by the number you calculated by dividing your ad views by 1,000 in the second step, to end up with your CPM value.

In short, the formula for calculating your CPM is ad cost divided by the result of dividing your impressions by 1,000.

## What is CPM in advertising?

CPM is an important advertising term in the world of a marketer. CPM in advertising allows you to see how much 1,000 advertisement views, or impressions, would cost on a webpage.

An easy way to understand CPM is by putting it in context. For example, if a website's CPM charge is \$5.00, that means that you, as the advertiser, would be paying that \$5.00 every 1,000 times your ad was seen.

After all, CPM stands for "cost per thousand impressions"!

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One of the biggest advantages of online campaigns is how easy they are to analyze and measure. With the right data, it’s easy to see just how far your advertising budget is taking you and the results your campaign is yielding.

If you enter impressions and total budget in the calculator, you’ll get your CPM. By calculating CPM, or the price you pay for 1,000 ad impressions, you can decide whether or not the amount you’re paying is cost-effective for your business. Low CPM means that your ad is being displayed to Internet users at a relatively low cost, while a high CPM means that you’re paying more per view.

If you already know the CPM for an ad, and enter it along with the total amount of impressions you want, you’ll see how much that would cost you.

If you enter CPM along with your total budget, you’ll see the amount of impressions you’d be able to have with that budget.

## Understanding CPM

Now that you've been informed on how to calculate your "cost per 1000 impressions," it's important to understand the term CPM in general.

CPM, like its name suggests, allows internet marketers to obtain a quantitative figure of how much it costs for 1,000 advertisements on a single webpage. To date, CPM is the most common technique used by marketers to assess the price of a web ad.

#### Similar, But Different

Similar to CPM, CPC and CPA also exist and serve as other ways of pricing ads on a webpage. CPC or PPC, both meaning cost per click, requires the promoter of a specific ad to pay each time the ad receives a click.

CPA, or cost per acquisition, differs. It is when the promoter of the ad only has to pay when a purchase is made that can be tracked back to the buyer clicking on the ad that resulted in that purchase.

#### What Method is Best for My Company?

As with every aspect of marketing, different techniques will be successful depending on the campaign type. CPM often makes the most sense if your company is driven toward increasing an awareness for your brand. It is also extremely helpful when your campaign is aiming to convey a detail-oriented message to your customers.

On the other hand, PPC stands out as a fantastic choice if you are using digital advertising.

## Ad impressions not working too well for you?

If the CPM of your ad campaign is too high to be worth the investment, or if you just aren’t seeing results, PPC might be a better option.

With pay per click advertising, or PPC, you only pay for ads when people actually click on them. That way, if someone sees your ad and isn’t interested, you haven’t lost anything. If you use search engines, you’ve most likely seen PPC ads before. In Google, for example, they can appear both at the top of the results and in a sidebar next to the results:

In this screenshot, every single result shown is actually a PPC ad. This means that if you were to click on any of them, the site owner would have to pay Google.

So how does Google (along with other search engines) decide who to show these ads to? When advertisers create PPC campaigns, they choose a set of keywords they want to be listed for. In the example above, all of the ads shown are for businesses that wanted to reach people who searched for “web design.”

All PPC ads are not priced the same, though. The cost for each click is determined by an auction process, and each advertiser has to set a bid for the maximum amount they are willing to pay per click for specific keywords.

This means that broad keywords like “web design,” which a lot of companies will want to compete for, are more expensive than specific ones like “web design companies in central Pennsylvania.” The fewer bidders a keyword has, the less you will pay to advertise in its search results.

Although it can take some trial and error to figure out which keywords work best for your site, PPC can be a much more cost effective pricing model for your digital advertising efforts than CPM. If you’re interested in learning more about PPC, or want help setting up a campaign, feel free to contact us! We’re more than happy to help you start maximizing your Internet marketing potential.