CPM is a beneficial way to pay for ads and earn from them. It helps advertisers and publishers grow their revenues, but only when applied at the right time and place. This article explains the CPM meaning, how it works, and when it enhances performance.
We’ll compare CPM with CPC (cost per click) and CPA (cost per action) marketing and provide simple tips to help advertisers and publishers get the most from their digital activities.
CPM in marketing and traffic monetization
CPM is a metric that shows how much an advertiser pays for every thousand views of an ad. It helps measure the campaign outreach and embrace broad audiences. It’s a great way to increase brand awareness or generate massive visits of your offer. For publishers, the cost per thousand impressions is an evergreen metric to count gains from ads.
The CPM meaning has evolved, making it possible to show ads to specific audiences (campaign targeting settings) and track results. Advertisers can monitor how visible their campaigns are and how many sales they get compared to ad views. Publishers manage their website income by regularly checking how costs per 1K of impressions change; they improve ad visibility to get higher payouts.
To Contents ↑How does CPM work?
The CPM definition embraces two components: the total number of ad impressions and the total campaign cost. You divide the total cost of the ad campaign by the number of impressions and multiply by one thousand. For example, a campaign costs $500, and you have received 100,000 impressions. The CPM will equal $5.
| Cost per mille formula: CPM = Total Cost / Total Impressions x 1,000 |
In traffic monetization, the eCPM is a more transparent metric: publishers divide their total earnings to a total number of advertising impressions and then multiply that by 1,000. Most highest-paying CPM networks also include clicks and conversions in this metric, because such user actions are more expensive compared to simple impressions.
To Contents ↑What can affect CPM?
Since we’re talking about the cost per thousand impressions, its value can’t stay unchanged. Several factors affect CPM rates, such as:
- country (or geo)
- traffic quality
- competition for traffic
- seasonality
- niche or industry
The screenshot below showcases how a smart algorithm by Adsterra estimates competitors’ payouts for 1K of impressions for Indonesian traffic. It then displays a minimum and recommended CPM payout to start getting enough traffic.
To Contents ↑Example: Advertisers who target Tier 1 and Tier 2 countries usually face higher rates as they reach out to the most competitive audiences. At the same time, publishers who attract users from Tier 1-2 countries, have higher payouts. However, that’s not the only opportunity for website owners to increase CPM rates.
CPM vs. CPC and CPA in advertising
Understanding CPM, CPC, and CPA is essential for optimizing advertising strategies. Marketers can manage these three media buying models depending on the campaign type and conversion flow.
| Model | Objectives | How it works | Use case | Example |
|---|---|---|---|---|
| CPM | Increase reach, get more traffic, test complex conversions (deposits) | Pay for the number of impressions (1,000 of views) | Launch new products, raise brand awareness, test iGaming or E-commerce campaigns | With $10,000 and a CPM of $10, a campaign can generate 1,000,000 impressions, increasing brand visibility |
| CPC | Prequalify traffic, weeding out “watchers” | Pay only for the clicks received | Attract visitors to the website, generate leads, or promote specific offers | With $5,000 and a CPC of $2, you can get 2,500 visits, if all users click the ad |
| CPA | Focus on sales or other conversions | Pay only when a desired action is performed | Achieve sales, sign-ups, or subscriptions; maximize ROI for campaigns focused on concrete results | With a CPA of $50, a $10,000 budget can deliver 200 actions maximum (a fantastic 100% conversion rate) |
Benefits of CPM for advertisers
1. Cost-efficiency of iGaming and E-commerce ads
CPM pricing is a cost-effective way to run iGaming campaigns with complex conversions like FTDs (first-time deposits). Advertisers can acquire much more traffic at lower costs. With refined targeting, this tactic is safer in terms of spending:
- you select desired targeting options
- pick a competitive bid
- run a test campaign
- optimize targeting and bids
- launch the campaign again
- form whitelists and experiment further with bids and creatives
Though you don’t focus on conversions, you reach out to relevant audiences who will convert and return you profits.
2. Rich targeting options
Just like with other pricing types, advertisers can target by countries, cities, operating systems (OS), browser, and language.
For example, a social app like TikTok can target iOS or Android users in the US. As a marketer, you can cut off users with older OS versions and focus on those who will be more likely to convert.
Adsterra connects brands with high-intent audiences from 248 geos serving 1.6 billion conversions per year. Make sure to add Adsterra to your priority traffic sources!
3. Campaign budget planning
A well-planned CPM campaign ensures predictability and efficiency. The CPM model allows you to pay a concrete amount for every 1,000 impressions. It’s easy to control budgets and achieve the desired reach. To ensure success, you need to:
- Define campaign objectives
- Select the target audience
- Set a competitive bid (Adsterra Traffic Estimator can help you out here)
- Create engaging ads using creatives that capture the audience’s attention
- Calculate a budget
- Define budget limits
- Launch a test
A successful example of acquiring CPM iGaming traffic is a campaign in Thailand which utilized Adsterra’s Social Bar ad format. With a $1,230 investment and a 325.6% ROI, the campaign generated $4,005 in profit.
4. Measuring ROI
Measuring ROI in CPM campaigns is as transparent as with any other pricing model. to see how well they are working and make adjustments. To enhance ROI measurement, Adsterra experts will recommend setting up tracking parameters. Here are some of them:
- ClickID, a unique set of characters that is attached to a URL and passed with user clicks.
- Ad placements’ performance, or how publishers’ websites (placed where your ads are displayed) perform.
- Ad creatives’ performance, or how your creatives engage users and convert.
All these parameters will add value to ROI measurement, making it easier to predict the output. Compares the amount spent to the earnings generated from the campaign.
An example of ROI measurement is provided by a pro affiliate who used Interstitial ads to promote an iGaming app in the Philippines. They spent $1,412 and earned $3,334 in profit, achieving an ROI of 236.12%. The campaign was regularly optimized by monitoring and adjusting traffic sources.
5. Cost optimization algorithms
The CPM model is perfect for businesses looking to reach a large audience without spending too much. However, you can hardly find a marketer who doesn’t want to reduce costs further.
Algorithms like Smart CPM allow for optimizing ad spend. It’s a second-price auction mechanic which will compare your bid for 1,000 impressions to competitors’ bids. If you win the auction, you don’t pay your price but just a bit higher than the bidder who came second (after you).
CPA Goal auto-optimization is a strategy of media buying for marketers. It enables pros to set rules and unlink ad placements if they don’t meet vitals KPIs: eCPA or the number of conversions. With solid traffic volumes, CPA Goal is a great opportunity to optimize spending: you buy ad views but ensure they convert the way you require!
6. Best for brand awareness campaigns
Finally, CPM campaigns allow businesses to reach a large number of people. This model is perfect for launching new products, entering unfamiliar markets, or strengthening a position in competitive sectors, ensuring that the brand is seen and remembered by the target audience.
Although CPM doesn’t focus directly on clicks or conversions, it’s a long-term strategy that builds trust and recognition.
Benefits of CPM for publishers
1. Manageable revenue streams
With high-quality traffic, CPM ads make financial forecasting easier. Publishers can predict revenues and steadily increase them by driving more traffic and/or adding more advertising formats.
However, CPM tends to change, and all publishers face sudden drops and soars in revenues. Earnings can vary depending on the number of advertisers targeting this or that website, seasonality, and how well traffic converts.
61% of our publishers make from 31 to 100% of their income with Adsterra. Monetize your site with a reliable and caring partner!
2. Easy to implement and manage
Earning from CPM campaigns is the easiest way of a website monetization. A publisher will only need to get an ad script (code) from an ad network and put it on their site.
Ad networks offer built-in tools and statistics to track performance, saving time and making it easier to manage revenues. Publishers can check which domain has the highest CPM rate, which countries are more profitable, group and compare data by date or other parameters.
3. eCPM advantages
eCPM is a more illustrative marker of a publisher’s success. It includes earnings from ads (a total amount of earnings from a particular domain) divided by a total number of impressions and multiplied by 1,000. Publishers can evaluate how effective their strategies are depending on the eCPM rate. It’s also clear when CPM rates peak—usually when traffic converts into actions like sales and orders.
4. Ad feed relevance
Using data-driven approaches, the CPM model helps publishers display highly relevant ads to their audience. Just like an example: Adsterra Direct Link—a simple URL to place anywhere on the website—is using smart algorithms to match advertisers’ offers with publishers’ traffic for better conversion rates.
5. Scalability and growth opportunities
CPM ad networks offer different formats, rates, and payment methods, allowing publishers to choose the option that fits their traffic and niche.
CPM advertising is scalable, meaning revenue increases as traffic grows and also when traffic becomes more relevant to advertisers. This attracts premium advertisers who compete to be displayed on a particular site.
To Contents ↑However, it’s important not to combine multiple CPM networks on the same site, as this can slow down page loading and hurt the user experience.
Conclusion
CPM marketing allows advertisers to pay for every 1,000 impressions and publishers earn from every thousand of such impressions. It’s a great way to boost brand visibility and reach a broad audience. This model offers clear costs and precise targeting, helping to improve campaign performance and increase engagement.
For publishers, CPM provides steady revenue based on impressions, with flexibility to adjust rates and maximize earnings. Adsterra, with its 50K partners on board, is a great platform for both advertisers and publishers, offering advanced tools to optimize campaigns and boost revenues.
CPM marketing FAQs:
To understand what CPM is, consider this example: an entertainment company pays $2 for promoting its social app in Germany. It means it pays $2 for every thousand of ad impressions within the defined targeting. The ad network’s algorithms estimate the competition and traffic available, and estimate the expected volume of 299,864 impressions daily with this bid.
The $10 per CPM means you will pay 10 US dollars for every 1,000 of advertising impressions (views) of your offer to your target audience. Alternatively, it means you can get paid $10 for every thousand impressions if you’re a publisher and your advertiser has set a bid of 10 US dollars.
