Are you looking for ways to boost sales and lower advertising expenses
wisely? Well, you are in the right place then.
Before starting, let me tell you a secret that digital marketing
professionals prefer not to share. It's important to understand that no
one-size-fits-all solution exists for creating an effective marketing
campaign. Each brand requires a unique and comprehensive approach; in other
words, agents can succeed in online advertising and e-commerce in multiple
ways. What a surprise, huh? That's why it's crucial to stay up-to-date with
the
latest trends in the marketing sector.
In this article, we'll focus on CPM - a term often used in marketing - and
its benefits for sales. We'll also discuss what is considered high or low
regarding CPM.
What is CPM, and why is it essential for your marketing strategy?
So, what does CPM mean? CPM is an abbreviation for "cost per mille," which
can be summarized as money paid by marketers for every one thousand
impressions of a digital ad. ( A reminder: Take into consideration that
impression is different from conversion; we will discuss this issue in
detail later in the article). Now, let's get back to our topic.
CPM is one of the most preferred pricing models in digital marketing since
it enables companies to optimize their ad budget. Many people are familiar
with this online marketing metric used by Google Ads. However, it's more
important to understand how CPM works and why it's essential for a
successful marketing strategy. CPM is a metric that shows how effectively
advertisers manage advertising budgets.
Definitions and terms aside, CPM rates guide us in budget management, so
it's essential to calculate and monitor CPM regularly. That is why it is an
integral part of a successful digital strategy. I will elaborate on what is
considered high and low regarding CPM later.
CPM vs. CPC: What's the difference?
The term CPM is often confused with the CPC. However, having a basic
knowledge of the difference between click and impression will ensure this
clarity. Letters help us when naming is hard to keep in mind. Based on this
logic, CPC stands for "cost for click", while the "M" in CPM corresponds to
“a thousand” in Roman numbers. We can distinguish abbreviations with that
simple and childish game. But kids know everything, right?
There is no doubt they are both handy tools, but you need to spot and
specify your primary goal correctly. If the major concern is brand awareness
- which is a must for a company- CPM is what you're looking for.
How to calculate CPM in Marketing?
Suppose you want to ensure the success of your advertising campaign. In that
case, calculating CPM (Cost per Thousand Impressions) is an absolute must.
Take advantage of potential revenue by taking advantage of this crucial
step.
Let me guide you through the process and help you achieve the results you're
looking for. Here's how to do it. You need two variables to calculate CPM:
total ad spending and number of impressions. Here is the formula of CPM:
Cost Per Mille (CPM) = (Total Cost of Online Advertising / Total Number of Impressions) x 1000
What is the average cost of CPM?
To assess the effectiveness of your advertisements, you can determine the
average CPM within your industry or the digital ad platform you work with
and then analyze the outcomes comparatively.
Recent studies
indicate that the mean CPM for Google Display Ads stands at $3.12; for
Google Search Ads, it is $38.40; while for Facebook Ads, it is $8.60.
European countries, Asian countries, developing nations, US, Canada and
more. As socio-economic statuses vary between regions, CPM rates also
change.
At the same time, the advertising campaign's objectives are also among the
main factors affecting CPM. For this reason, it is not possible to talk
about an average or, in other words, an “ideal” expense range. But CPM costs
per year among countries can be predicted. There is another point that needs
to be clarified at this point. That is to understand what high and low rates
show us, or more importantly, what they do not show us.
What does high and low CPM mean?
Why do my online ads have such a high CPM?
If you rely solely on math calculation, you may not be managing your budget
effectively. But there is another side to the coin, as always. A high CPM
does not necessarily mean that a campaign is unsuccessful. Similarly, a low
CPM should not directly indicate positive results. Regarding advertising
expenses, CPM analysis should be interpreted depending on other factors such
as country, product, potential customers, target audience, or competition
level of sectors.
Let's examine the countries with the highest CPM rates to make it clear. The
United States, Ireland, Canada, Australia, and the United Kingdom are the
first five countries
with high CPM rates. Do you think these countries manage their advertising
revenues poorly? Or is there any other explanation for this result?
Wealthier countries with settled industries have higher user engagement.
User engagement leads to high competition, making it hard to catch the
audience, resulting in high advertising prices.
According to this logic, it would be wrong to say there is a direct
correlation between high CPM and overall advertising success.
Conclusion
The CPM metric, familiar to almost every seller using Shopify and Facebook
platforms for brand visibility, will take your campaign to the next level
when used correctly. The most crucial detail to consider is that reaching
the right audience is more important than the number of people reached in
the long run.
While almost all brands focus on growth, they overlook that the first rule
of growth is precise moves with relevant content. If you want to
learn more about CPM, have a look at the comprehensive article written by our marketing experts
on the subject.
