Back to glossary index

What Is CPM (Cost Per Thousand) and Why It Matters

When it comes to marketing prices, you need to know the average cost of running an advertisement in a specific area. Many advertising space companies charge marketers based on the cost per thousand (CPM) metric.

Today, let’s look at CPM, what it means, and why it matters for your marketing budget.

What Does Cost Per Thousand Mean?

Cost per thousand or “cost per mille” (CPM) is the price of 1000 advertisement impressions for a billboard, webpage, or other advertising location. Mille means thousand in Latin, which is where this advertising metric derives its name.

For example, if a billboard space vendor charges $100 CPM, that means it charges $100 for every 1000 impressions of the advertisement on that space. Fortunately, you'll only rarely run into this situation. 

OOH advertising usually has the most budget-friendly CPM ratio of all advertising media. An average billboard CPM, for example, is around $5: quite the steal compared to other marketing efforts.

While CPM is an important advertising budget metric, it’s only one of several methods that an advertiser can use to price their ad space. Other popular methods include CPC or cost per click and CPA or cost per acquisition, though those are mostly used for online advertisements.

CPM bidding is used beyond billboard marketing, of course. It’s used to calculate advertising costs for social media ads. It’s used in display advertising. It even applies to webinar attendance prices. Plus, you can see the use of this metric in other efforts in digital marketing and social media marketing. 

However, CPM campaigns must beware of bots affecting their apparent impression rates.

How Does CPM Affect Marketing?

CPM can heavily affect your marketing campaign because it’s a common method for pricing advertisement space

Say you want to put up another few billboard advertisements in a target city filled with your target audience members. In that case, you’ll need to talk to OOH marketing firms to learn how much you’ll have to pay for a set of billboard ads.

The marketing companies you contact price their billboards at a rate of CPM. In this way, you can accurately determine which billboard positions are the most likely to be profitable for your brand based on how many impressions they are likely to generate.

An impression is essentially an ad view. While there's no guaranteed way to know whether someone looks at a billboard ad, most people who see an advertisement in front of them will at least glance at it and absorb its information. This is especially true if the advertisement is created effectively for quick understanding.

CPM more often affects online marketing, especially when combined with metrics like click-through rate (CTR). For example, if an advertisement gets two clicks for every 100 visitors on a webpage with an advertisement, it has a 2% click-through rate. This can be used to measure the advertisement’s success.

Bottom line: CPM is important for marketing since it helps you budget where you place your advertisements and determines how effective an ad might be once it’s up and ready to view.

Are Impressions the Same as Page Views?

Impressions aren’t page views, and it’s important to understand the difference if you plan to extend your marketing into the online arena.

Because not everyone views every advertisement on a given webpage, it is possible for ad impression numbers to be different from page view numbers. 

For example, suppose a marketer places an advertisement in two locations on the same webpage, like across the top of the page and on a vertical spot beside the page’s primary text. In that case, the advertiser might pay for two impressions for every page view.

That said, most marketers assume that impressions are roughly the same as page views for marketing budget purposes.

CPM vs. CPC vs. CPA

While CPM is an important marketing budget metric, it’s not the only one you can use, especially when it comes to online ads, such as banner ads or pop-ups.

  • Cost per click (CPC) is a separate pricing model that requires the advertiser to pay the website or hosting company every time a website visitor clicks on the ad. CPC is the same thing as PPC or pay-per-click pricing. This type of pricing model can be beneficial since advertisers don't have to pay the hosting page/company any money unless a visitor actually clicks on the advertisement.
  • Cost per acquisition (CPA) is another pricing model where the advertiser makes a payment to the website every time a visitor makes a purchase after clicking on an ad. Again, this can be quite cost-effective, as the advertiser presumably only pays for marketing when they make a profit, but it's only appropriate or available in some contexts.

What Are the Benefits of Using CPM in Marketing?

Since there are many different ways in which you can price your marketing campaign, why use CPM? Ultimately, CPM is a popular pricing model for a few key reasons.

Building Brand Awareness

Cost per thousand can help you build brand awareness across the board, especially if you want to swarm a given area with billboards or OOH advertisements. 

Building brand awareness is especially important for small businesses that are trying to build up a loyal audience base rather than sell a bunch of specific products quickly. The more people see your products and brand imagery, the more they will trust your brand authority and credibility.

Testing Designs

Furthermore, CPM pricing allows you to test advertising designs to see which ads are most engaging and are most successful with your target audience members.

CPM pricing can be affordable in bulk, enabling you to put up a lot of slightly different advertisements in a concentrated area, then see which ads get the most traffic or responses from people in different geographic locations. 

Trim the fat by replacing low-performing ads with high-performing ones, and your marketing campaign will become more effective over time.

Improving Reach

Lastly, CPM advertising lets you reach many potential customers and solidify many new leads compared to other pricing models. In this way, CPM advertising is again important for new brands trying to build up their target audiences.

When you need to acquire customers to start spending money at your company, CPM advertising could help you get the most bang for your marketing buck. You’re paying for tons of impressions, not a small group of impressions from visitors or viewers who are already likely to make a purchase from your company.

Contact AdQuick Today

As you can see, cost per thousand is an important metric you should consider when planning and budgeting for your marketing campaigns. When you understand CPM, you'll be able to purchase the most cost-effective advertising space for any campaign you have in mind.

AdQuick Pro can also help with this goal. Our comprehensive tool allows you to plan, buy, and measure all of your out-of-home advertisements on one intuitive platform. When it comes to billboards and other OOH advertising, AdQuick Pro is the go-to solution; try it today.


Try AdQuick

Launch hyper-targeted OOH campaigns in minutes

Get Started ->

Launch hyper-targeted OOH campaigns in minutes