What is CPM, how is it calculated and when should it be applied?

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A fundamental part of digital marketing is paid advertising. To successfully carry out your campaigns, it is necessary to calculate and measure the actions you carry out, because, in addition, everything that is not measured cannot be improved.

Today we're going to tell you all about CPM or cost per thousand impressions, one of the main office 365 database metrics for SEM . Keep reading so you don't miss anything on this topic!

What is CPM?
CPM or cost per thousand is an online advertising model where the advertiser pays every time the ad is displayed 1000 times, regardless of whether users have clicked on it or not.

The difference with other forms of advertising is that you pay when you reach 1,000 impressions, and most importantly, the user does not need to click on the ad link, they just need to see it for it to count.

The main objective of running a CPM campaign is to create awareness on the Internet, a quick way for users to find out about your brand, products or services. It is not so important to generate traffic to the website, the main thing is for people to see it and find out about your existence.

How is it calculated?
As with everything in digital marketing , to ensure the success of your campaigns you need to calculate your actions, because no advertising is left to chance.

The formula for calculating the cost per thousand is very simple:

(Cost / Impressions) x 1000

We show you a more visual example to understand it completely. Imagine that you have paid €20 for 4000 impressions, then the calculation would be the following: (20/4000) x 1000 = 5

The CPM is 5, which means that for every thousand impressions your ad costs 5€. And if you want to know how much each impression costs, it's easy, since it's the division of 20/4000, that is, you pay 0.005€ each time a user sees your ad.

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When to apply CPM?
At the beginning we mentioned that this is a model that is usually applied to campaigns that seek to generate awareness and presence on the Internet; the main objective is not to drive traffic to the website, generate leads or a conversion by the user.

Therefore, if your goal is to create awareness, then you should apply this CPM or cost per thousand model, so that users see your ad when they browse the Internet.

Like other payment models, such as CPC or cost per click or CPA or cost per acquisition , it is not better or worse, it is applied depending on the needs and objectives of your company.

Advantages and disadvantages of CPM
We have already mentioned that there are no good or bad advertising models, some simply fit certain objectives or others. If your goal is to generate leads, then CPM is not of much use to you, whereas if what you want is for your brand or one of your products to be known, then you are interested in applying this model.