Understanding CPM Trends: What's Considered High vs. the Low in 2024?

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.