Cost Per Mille or CPM is one of many different metrics that you will be able to get based on the performance of a PPC ads campaign. Using metrics like this is highly important as a way to make sure that you are maximizing your ROI (return on investment) and that your campaign is profitable.
A PPC campaign is a type of advertising campaign that costs you each time someone clicks on one of your ads. This means that you don’t get charged for your simply showing on a website. Normally, this will work via an advertising network such as Google AdSense or Google AdWords. Facebook also works in the same way.
The great thing about PPC is that it is costing you for each time someone clicks on your ad which in turn means it’s costing you for each visitor. You literally are now paying for people to come to your website, which gives you the opportunity to monetize those visits through conversion rate optimization and thereby to ensure that you earn more than you are paying. This is especially true, seeing as you will likely only pay a few cents every time someone clicks on your ad.
If you know your ‘maximum bid’ (the most you are agreeing to pay per click) and if you know your CLV (customer lifetime value) then you can tightly control your spending and your profits and ensure you are always in the black.
But while CPM is a very useful metric, it is not an accurate picture of your overall spend. That’s because CPM doesn’t tell you anything about impressions.
What is CPM?
CPM is cost per 1000 impressions. CPM stands for Cost Per Mille but this is also referred to as Cost Per Thousand. In short, it means that you pay X amount for every 1,000 times your ad is loaded on a page (notice the distinction between loaded and seen – depending on the position of the ad on a page, it can be loaded but still not seen).
CPM is sometimes calculated in a literal sense, meaning that you are charged every time your ad is loaded and this ads up over 1,000 views. This is how some advertising networks choose to charge their advertisers and it is down to you to decide if this is better or worse for you than PPC.
On the other hand though, CPM can also be calculated based on the average number of clicks you get per thousand impressions. This is your CTR or your ‘click through rate’.
If your CTR is high and your cost per click is high, then you are going to spend more money on the whole. But this will still be limited by your overall budget, which most PPC networks allow you to set in order to ‘max out’ the total you will spend. Once your ad spend goes beyond this point, you will then stop displaying your ads until the next day or month.
