What Is CPM?

Why Is CPM Important?

From an advertiser’s perspective, they can estimate the cost of an ad campaign and its reach so that they can keep within their budget. When measuring the performance of their ad campaigns, advertisers can track how much exposure their ads have received through the number of ad impressions. 

Publishers tend to track effective cost per mille (eCPM) – closely linked with CPM – which directly calculates this estimated revenue. With this pricing model, publishers can generate revenue each time an ad is served in their app without a mobile user needing to interact with the ad itself. 

What’s the Difference between CPM and CPI?

Unlike CPM campaigns, CPI campaigns rely on a user installing an app – and therefore not just viewing the ad but interacting with it directly. 

CPI campaigns are incredibly beneficial for advertisers. This is because they only pay for the users installing their apps – the users they’ve acquired.

What Is the Cost Per Mille Formula?

To calculate cost per mille, you should apply the following formula.

Let’s put this formula into practice. If an advertiser pays $1,700 to serve its ad in a publisher’s app and the ad went on to receive 500,000 impressions, the advertiser would pay a CPM of $3.40.

What Is a Good CPM?

Cost per mille tends to vary from platform to platform, GEO to GEO, and the time an ad is served, among other things. This makes it difficult to determine a target CPM. Trends and seasonality also play a large part in fluctuating CPMs. However, from these patterns, advertisers can identify when and where valuable impressions are being served.  

As an advertiser, it makes more sense to compare results with averages within your own vertical – for example, puzzle games – and keep your ROAS in mind to see if the CPM you are paying is effective in terms of your UA efforts. 

Aiming for a lower CPM may sound like a promising goal, but this could result in poor-quality traffic for your app.

Conclusion

Considered both a metric and a pricing model, app advertisers predominantly use CPM to ensure they stick to their budget. With it, they can estimate the cost and reach of a campaign if it is based on CPM pricing. 

However, app publishers will also be familiar with this metric, as it is closely linked with eCPMs, which directly calculates the estimated revenue of an ad campaign.

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