Online Advertising: CPM, Cost Per Mille, Cost Per Impression

Posted by Bart on November 14, 2010

CPM, or Cost Per Impression, or Cost Per Thousand Impressions, is the unit used to define and to calculate the Pay Per Impression model of payment for Online Advertising.

CPM stands for Cost Per Mille (in Latin, Mille means Thousand).

It’s a mystery why the term CPM is used and not CPI (Cost Per Impression), or CPT (Cost Per Thousand), but it refers to the same thing.

The reason to use Thousand (or Mille) is because the CPM is a price “per 1,000 impressions”. This means that for instance if a publisher asks for a US$ 10.00 CPM, the advertiser will pay US$ 10.00 for 1,000 impressions, or US$ 10.00 for 1,000 appearances of its ad on the publisher’s web page.

If the advertiser wants 10,000 impressions, the total cost will be:
US$ 10.00 x 10 = US$ 100.00

CPM is also used for Email Marketing where 1,000 impressions means 1,000 email addresses.

Unlike other payment models like CPC (Cost Per Click) or CPL (Cost Per Lead), CPM is not a pay-per-performance model. This means that the success (or failure) of the advertising campaign has no effect on the amount of money earned by the publisher: if no one clicks on the ad and nobody visits the advertiser website, the publisher will still make the full amount of money.

This is a model where the advertiser takes all the risk. The publisher simply sells an ad placement, with no guarantee on the results.

This model is widely used for online advertising because it comes from the same model for traditional advertising (TV, Magazine, Radio, etc.) where you pay for an advertising placement at a fixed rate, which is only based on the media audience and popularity.

However, the Internet is offering many more tracking solutions than any other media and allows all kind of performance and ROI measurements. Therefore agencies and advertisers are more and more reluctant to use this model, especially with small and medium websites whose audience is difficult to estimate, in term of quality and responsiveness.

In addition, this model is not really adapted to e-merchants, whose primary objective is to sell products (not to create Brand awareness), as well as to general websites who need traffic and visitors, not fame.

That’s why pay-per-performance models have appeared and are now strongly competing with CPM. The most famous ones are Cost Per Click and Cost Per Lead, and we will define them (and others) in coming articles.

More about Online Advertising? Visit the Training page!

Online Advertising: Ad Impression

Posted by Bart on November 4, 2010

An Ad Impression is similar to a Page Impression.

In Online Advertising and Internet, a page impression is when someone loads a page. Each time an Internet user loads a page (visits a page) or refresh it, it counts as one impression. If he visits the page again, this is one impression more. For example, I visit the home page of a website, then another page, then the home page again: the home page has been visited twice. These are 2 impressions.

It’s the same for Ad Impressions but not for the whole page, only for the ad banner (because you can have several different banners on the same page, or the same banner on several different pages): each time the banner is loaded, this is 1 ad impression.

Loading one page may generate several ad impressions, while loading several pages may generate several impressions of the same ad.

And of course, it’s possible to count the number of impressions, for instance to calculate the Cost Per Impression (Payment model that we will define later on).

For email marketing (advertising emails sent to website members), an impression is counted when the email is open (and the ad banner loaded). Every opened email counts as one impression.

More about Online Advertising? Visit the Training page!