Learn what is CPM and why this is an essential advertising metric.
I’ve also included the CPM formula, calculator, and average CPMs for different industries.
What Is CPM (Cost Per Mile)?
CPM stands for Cost Per Mile, but in advertising, “mile” refers to “thousand.” So, CPM is actually Cost Per Thousand.
This metric is used mainly in marketing and advertising to determine the cost of 1,000 advertisement impressions on a webpage or in other media. An impression is counted each time an ad is displayed, so CPM helps figure out how much it costs to have your ad seen by a thousand viewers.
Cost Per Mile (CPM) Formula
The formula to calculate CPM is quite straightforward.
You take the total cost of the advertising campaign and divide it by the number of impressions the ad received, then multiply by 1,000.
CPM = (Total Ad Cost / Ad Impressions) x 1,000
How to Calculate CPM?
To calculate CPM, you follow a few basic steps.
First, find out the total amount of money you spent on your advertising campaign. Next, you need to know how many times your ad was shown, which is the number of impressions.
For example, if you spent $500 on your campaign and your ad was shown 100,000 times, you would calculate your CPM like this:
Divide your total ad cost by the number of impressions. So, $500 divided by 100,000 equals 0.005.
Then, multiply that result by 1,000 to find your CPM. So, 0.005 multiplied by 1,000 equals $5.
That means your CPM, or the cost to have your ad seen by a thousand viewers, is $5. This method gives you a clear view of how efficient your advertising spend is in terms of visibility.
Cost Per Mile (CPM) Calculator
To quickly calculate cost per mile, user our CPM calculator:
What Is the Average CPM?
The average Cost Per Thousand (CPM) varies significantly depending on the advertising platform, the content type, and the target audience.
Here’s a broad overview based on recent data:
Social Media Platforms
The average CPM can vary:
- Facebook Ads have seen CPMs around $14.00.
- Google Ads display an average CPM of $10.50.
- LinkedIn, specifically for B2B companies, can see a higher range with averages around $35 but can go as high as $40 or more for targeted campaigns.
By Content Type
Video content tends to have higher CPM rates due to its engaging format. For instance, video CPMs on mobile platforms can range from $4.70 to $10.00.
Display ads are generally less expensive. For example, desktop display ads have a lower average cost per mile, typically around $2.50.
CPM in the Mobile App and Gaming World
In the world of mobile apps and games, the CPM metric serves dual interests, each pulling in opposite directions.
Publishers’ Perspective: Aiming for Higher CPMs
Publishers and developers of mobile apps and games often use ads as a primary revenue stream.
They prefer higher CPM rates because it means they earn more money for every thousand ad impressions displayed within their apps. The higher the CPM, the more profitable their ad space becomes, incentivizing them to maintain and grow a user base that attracts advertisers.
Higher CPMs can also correlate with higher-quality ads.
Advertisers who are willing to pay more are often those with bigger budgets and better-quality ad content. This can enhance the user experience indirectly, as higher-quality ads can be less intrusive or more engaging.
Advertisers’ Perspective: Seeking Lower CPMs
Advertisers naturally aim to reduce costs, and seeking lower CPMs allows them to stretch their advertising budgets further. By paying less for each thousand impressions, they can afford to run more ads or extend their campaigns’ duration, which potentially increases their ads’ reach and frequency.
While low CPMs are cost-effective, advertisers must balance this with the need to target the right audience effectively. Too low a CPM might mean the ads are not being shown in premium or relevant contexts, possibly leading to lower overall campaign effectiveness.
Balancing Interests
Both publishers and advertisers continuously adjust their strategies based on market dynamics. Publishers might use strategies like dynamic pricing to adjust CPM rates based on demand, while advertisers might shift their budgets across platforms to optimize their spending.
Ad mediation platforms and programmatic advertising can help balance these interests by dynamically serving ads to the most appropriate audience at the most efficient price point. This technology allows real-time bidding for ad spaces, where advertisers can bid for ad slots and publishers can accept bids that meet their CPM expectations.
In this tug-of-war, the effectiveness of CPM as a metric ultimately depends on achieving a balance that satisfies both parties.
Publishers need to maintain a user-friendly environment that keeps players engaged and receptive to ads, while advertisers need to target their ads carefully to ensure they are reaching potential customers in a cost-effective manner.
Average CPMs for Mobile Apps and Games
In the mobile app and gaming industries, CPM rates can vary widely based on the type of ad, platform, and geographical location.
Here’s a breakdown of what you can expect:
Rewarded Video Ads
Rewarded ads generally offer higher eCPM rates due to their interactive nature, requiring users to watch ads to receive in-app rewards.
For Android devices, eCPM rates can be around $2 in regions like Latin America and slightly higher in parts of Asia. iOS tends to generate higher rates, with figures reaching up to around $13.81 in the U.S., although this has seen a decrease from previous years.
Interstitial Ads
These full-screen ads that appear at natural transition points within apps also fetch a significant eCPM.
In the U.S., the average eCPM for Android interstitial ads has been reported around $11.06, indicating a stable demand. European markets like Western Europe see lower rates, around $3.31, while Eastern Europe has even lower rates averaging at $1.77.
Banner Ads
Banner ads typically have lower eCPM rates due to their less intrusive nature. In the U.S., the eCPM for banner ads on Android is about $0.60, which is higher compared to other regions. In Western Europe, the rate drops to about $0.22, and further east in Eastern Europe, it’s even lower at around $0.09.
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