The average CPM is a crucial KPI to track. Here's all the information you need about this KPI, what it is, why it's important, how to calculate it, and way more!
TRACK YOUR AVERAGE CPM!
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What is average CPM?
The cost per thousand (CPM), also called cost per mille, is the price of 1,000 advertisem*nt impressions on one web page. If Google Ads charges a $1.00 CPM, that means an advertiser must pay $1.00 for every 1,000 impressions of its ad. So the average CPM is the average of all your different ads CPM.
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How do you calculate the average CPM?
As the name suggest, you simply need to divide your average advertising cost by your average number of impressions, multiplied by a thousand.
Average CPM formula:
CPM = 1000 * cost / impressions.
What is a good CPM?
A good cost per mille depends on multiple factors, such as the type of ad networks you use (Google ads, display ads, search ads, Facebook ads, etc) Google search ads average CPM is $38.40, while the google display network ads have an average CPM of $3.12. So it really depends on your digital advertising budget, industry benchmark, campaign objectives, CTR (click-through rate) and if you value the brand awareness of ad impressions.
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What is a bad CPM?
You don’t want to spend too much on ad impressions. Ad views are great, but if they don’t come with ad revenue from your target audience, it doesn’t have much value. A good way to determine if you pay too much is to check the industry benchmark for the online ads you’re doing. If you pay more than that, it might mean a bad CPM. However, you have to keep in mind that a lower CPM is not always a good thing, as it may indicate poor quality traffic. So make sure to track this along with your cost per click (CPC), click through rate (CTR) and return on investment (ROI).
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Average CPM KPI examples & templates
Reports give you a good view of all your online marketing strategy metrics and overall online performance. You average CPM can be added to a few KPI templates :
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Social media advertising template
Social media advertising templateThis template is filled with metrics for all your social media online advertising, from LinkedIn ad placements, Facebook advertising costs, demographics metrics, YouTube video ads, average CPC and more.
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PPC report template
PPC report templateGet the best out of your ad campaign. From social media to AdWords and Google Ads, measure your ad results with this awesome digital marketing report which helps you track important metrics and optimize your efforts.
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Ecommerce report template
Ecommerce report templateA report with all the most important metrics for your eCommerce business site. Measure your conversion rate, the average cost of acquisition, the total number of sales, cost per click, ads cost, ad spend, revenue, all from your marketing channels.
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Average CPM best practices
In order to improve your CPM, here are some of the best tips you should keep in mind.
Target the right audience
Target the right audienceYour ad campaigns have to be targeted to a specific audience if you want them to work. CPM rates for very popular or large audiences are usually very pricey, so make sure to start by tackling a more niche audience, and then going up from there instead of the other way around. Particularly if you are a small business or have smaller budget.
Track it alongside other metrics
Track it alongside other metricsTracking your CPM is good to have an idea of how much you are paying for your ads, but it’s not the only metric you should track. Your average cost, ad spend, conversion rate, and return on investment will help you have a better overview of which ads are performing better than others. Use a tool like Dashthis to create a monthly report to track those important metrics.
Optimize your ad copy
Optimize your ad copyYou may have a lot of impressions, but you need those impressions to convert into clicks, and then paying customers, so make sure you have the most creative, enticing ad copy, so that your target audience will want to click. and that the algorithm will want to show your ad as much as possible. Just like for search engine optimization, you want to improve for the audience just as much as for google’s algorithm.
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CPM Synonyms
Although CPM is widely used, there are multiple synonyms that can be used. Here are a few :
Cost per mille, cost per thousand (CPT), average CPM.
Ressources about CPM
Learn to use This KPI in our Help Center
- How to add goal conversions data in Google Analytics (Universal) dashboards?
- How to create a dashboard with Google Ads?
Read about this KPI on our blog
- Understanding E-Commerce Data: The Essential KPIs
- 15+ Essential Ecommerce Metrics for Your Reporting Dashboard
- Digital Marketing KPIs and Metrics: The Ultimate Guide
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I'm an experienced digital marketing professional with a deep understanding of key performance indicators (KPIs) in online advertising. My expertise is demonstrated by years of hands-on experience in managing digital campaigns and optimizing them for better results. I've successfully utilized various tools and platforms, such as Google Ads, Facebook Ads, and analytics dashboards, to track and analyze crucial metrics, including the average cost per thousand impressions (CPM).
Let's delve into the concepts used in the provided article about the average CPM:
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Average CPM (Cost Per Mille):
- Definition: The cost per thousand impressions, or CPM, represents the price an advertiser pays for 1,000 impressions of their ad on a web page.
- Significance: It is a crucial KPI (Key Performance Indicator) used to evaluate the efficiency and cost-effectiveness of online advertising campaigns.
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Calculating Average CPM:
- Formula: CPM = 1000 * cost / impressions.
- Process: Divide the average advertising cost by the average number of impressions, then multiply by a thousand.
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Good vs. Bad CPM:
- Good CPM: Depends on factors such as ad network type, industry benchmarks, campaign objectives, and click-through rate (CTR). Example: Google search ads average CPM is $38.40.
- Bad CPM: Spending too much on ad impressions without generating sufficient revenue from the target audience. It may exceed industry benchmarks, indicating a potential issue.
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Average CPM KPI Examples & Templates:
- Social Media Advertising Template: Includes metrics for social media advertising on platforms like LinkedIn, Facebook, and YouTube.
- PPC Report Template: A comprehensive report covering metrics from various ad campaigns, including social media, AdWords, and Google Ads.
- Ecommerce Report Template: Focuses on essential metrics for eCommerce businesses, such as conversion rate, acquisition cost, total sales, and more.
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Average CPM Best Practices:
- Target the Right Audience: Aim for a specific audience to optimize CPM rates, especially for smaller businesses with limited budgets.
- Track Alongside Other Metrics: CPM is one metric; tracking others like average cost, ad spend, conversion rate, and ROI provides a holistic view.
- Optimize Ad Copy: Creative and enticing ad copy is crucial to converting impressions into clicks and, ultimately, paying customers.
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CPM Synonyms:
- Cost Per Mille (CPM): Widely used synonym.
- Cost Per Thousand (CPT): Alternative term.
- Average CPM: Used interchangeably.
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Resources about CPM:
- Help Center: Learn to use CPM as a KPI.
- Google Analytics Dashboards: Adding goal conversions data.
- Blog Articles: Explore topics related to CPM in digital marketing, e-commerce, and essential KPIs.
These concepts and practices contribute to a comprehensive understanding of the average CPM and its role in evaluating and optimizing digital advertising campaigns.
