How does CPM work?

CPM is a very traditional online marketing metric in which companies pay for views of their advertisement. It's primarily used in advertising media selection, marketing as related to web traffic, and online advertising. One great example that many companies might be familiar with is Google Ads. This platform works on a CPM and a CPC basis.

Because an impression is such a small thing, these numbers are typically measured in thousands or more. Unlike a cost per click model, a cost per thousand impressions model measures a very high-level awareness of a company.

How is the cost per thousand Impressions measured? The typical formula is:

Cost per impression = Advertising cost / 1000 Impressions

This is CPM. All strategies, methods, and campaigns that are built around this metric are CPM. The best results from this equation are found with digital marketers who have leveraged this into success for other companies and themselves.

How do campaigns targeted toward CPM compare to other types of campaigns, like CPC? The cost of a CPM campaign is generally less than other compatible marketing strategies. Companies can get more impressions for less money than they can get guaranteed results in most other marketing campaigns. However, an impression can be difficult to measure. An "impression" is counted any time the platform serving the ads determines that an ad is viewable by their standards..

Let's move on to where CPM metrics are commonly used and how it is used in a wider digital marketing strategy.

Where do companies see the best results from CPM strategies?

Companies see the best results from CPM strategies when they're used in a wider marketing campaign that is focused on raising awareness of their product and/or brand recognition.

Because CPM strategies are so targeted, they're not ideal for smaller, niche companies to appeal directly to a small subset of the population. They also don't do well if you need quantifiable results to back up your marketing dollar spend. In order to create a strong foundation for a CPM strategy, make sure you clearly understand your:

  • Overall business goals and how a CPM metric will help you measure them
  • Particular goals for your new strategy
  • Definition of a lead
  • Appropriate ways to follow up on your newly-generated customer awareness

Finally, please don't use these strategies by themselves. The best results from CPM strategies and CPM marketing are always in tandem with another form of marketing that follows up on your leads and works on converting your new leads to new customers/clients.

Let's take a look at how it plays in the wider sphere of digital marketing and some strategies that it pairs well within your marketing toolbox.

How does CPM relate to digital marketing?

Digital marketing encompasses a lot of different things. One of these is low-level awareness of a company, product, or brand. That's where CPM strategies can boost digital marketing efforts to the next level. If no one knows about a company and they don’t have a built-in niche market, where will customers come from?

CPM strategies are a great way to raise awareness and brand recognition. This awareness primes people who are looking for the type of solution that is being offered.

For example, a company that has created a new type of ballpoint pen might run a CPM campaign across multiple different websites to raise awareness. Since many people use ballpoint pens, all they want to do in this campaign is to raise awareness of a different pen on the market. After enough people know about the pen, they can start more targeted as designed to appeal to subsets of their customer base.

Another way of thinking about it is to look at CPM strategies as a top of the funnel strategy. They focus on collecting a wide amount of eyes on a piece of marketing and depend on other strategies to carry on the funnel.

With all that said, how can companies leverage CPM marketing and get started on an awareness marketing campaign?

Getting started with CPM marketing

In order to start a successful CPM marketing strategy, campaign, or other method using this strategy, a foundation must be built on three things:

  1. A proper understanding of what a lead, awareness, and what the CPM metric means to your company and strategy.
  2. An established budget for this part of your marketing that is separate from your overall budget.
  3. A plan for the next steps in your overarching marketing strategy.

If these three pillars are not in place before a CPM strategy is deployed, it's very difficult to see and measure success.