Data insights
27. marts 2020
What you can use CPM for
There is some disagreement about whether “CPM” is an abbreviation of “Cost Per Mille” or “Cost Per M” (M being the Roman numeral for 1,000). In any case, it is a metric that shows what you pay per 1,000 impressions of your ads.
CPM explained
The term CPM is most often used on social media channels, where you are charged based on the number of impressions of your ad.
Note: The results above are an average that we found by analysing across customers, markets, and industries, and based on our experience as a Paid Social agency. Every case is different, and the numbers will be too.
What can you use it for?
First, you can use CPM to manage your budgets. Since most ad platforms are billed on a CPM basis, you can ensure that you do not pay more for the desired number of impressions of your ads than you budgeted for.
If you know how many impressions you want, you can calculate your budget using the equation below:
CPM x desired number of impressions / 1,000 = Your budget
Example: You want 100,000 impressions of your ads. The ad platform tells you that your audience’s CPM is DKK 120. Therefore, the ad budget should be:
120 x 100,000 / 1,000 = DKK 12,000 in total.
The above is what most people use CPM for. But honestly, looking at a CPM versus the number of impressions is meaningless in itself.
It makes sense for advertising/marketing agencies that need something quantifiable to report back to the client—but the CPM figure has more to offer.
Below you can see the average CPM we see across markets, industries, and countries—broken down by channel.
| Channel | Average CPM |
| DKK 49.65 | |
| DKK 233.22 | |
| DKK 44.82 | |
| TikTok | DKK 4.88 |
CPM can help you prioritise your audience
Yes, that may have been a slightly clickbait-ish headline, but it is not entirely off the mark!
The price of a thousand impressions depends on the demand for exposure to a person/audience. CPM therefore essentially shows which audiences are in high demand, as these will be more expensive than others.
The savvy marketer has not simply created a campaign with all audiences lumped together in one ad set. No—the savvy marketer has created a campaign with multiple segmented audiences. As a result, you can see differences in performance across different parts of the audience.
So perhaps your audience based on “Job titles” has a much higher CPM than those you target by “Interests”. If so, you can now consider what is most relevant for you:
- Allocate more budget to the audience with a high CPM, indicating that more advertisers want to reach them because they are a type of decision-maker.
- Allocate more budget to the audience with a lower CPM. This way, we achieve more impressions within the budget, but perhaps to a less attractive audience.
But it is important that I reach my entire audience
Yes, we know that one… but are you willing to pay the price for enough exposure to every single person in your audience?
Or is it more important to reach the most qualified segments of your audience so you can stay within your marketing budget? That is where CPM suddenly becomes interesting, because if you do not have unlimited funds to pay for impressions indiscriminately, you can select the part of your audience that seems most purchase-ready at the most reasonable price.
In reality, we would never recommend using CPM as a metric for whether something is good or bad in itself. You should compare your CPM against a CTR (click-through rate). When you do, you suddenly get a more complete picture with information such as:
- What the impressions cost
- And how many of them click through to your website
You should be willing to pay a higher CPM for an audience that, compared to the average, has a higher CTR. Historically, a higher CPM is also associated with a higher CTR.
