Everyone is familiar with CPC and CTR but what about CPM, why does it matter? Well CPM (Cost-Per-Mille) is your cost per thousand impressions, basically it’s the amount you pay for every 1000 people who are exposed to your ad e.g. CPM of $2 means you are paying $2 for every 1000 impressions. CPM is one of a combination of metrics that will not only help you understand your ads effectiveness but also whether or not you're getting the most out of your budget.
Let’s start by looking at the customer journey, CPM analysis is particularly valuable when your KPI is brand awareness, a low CPM is ideal when you are trying to create that first touchpoint with your target audience. That doesn’t mean CPM should be ignored if your KPI is further down the funnel such as in lead generation. If you’re looking for active audience engagement e.g. ‘download a checklist’ a high CPM that is counterbalanced by high-quality impressions should demonstrate that you’re on the right track and that you should double down your efforts in this direction.
CPM can also act as a benchmark to calculate the cost of your ad across a variety of mediums and platforms. If your ads are receiving good engagement on Facebook at a lower rate than on LinkedIn, then it strengthens the case to focus efforts on Facebook, other metrics will, of course, need to be taken into consideration. CPM is effectively one piece of the overall jigsaw.
Monitoring your social media ads go beyond checking the CPR and Sales. Conversions are important but a combination of metrics including CPM will help give you the overall picture allowing you to predict and improve the performance of the ads depending on your KPI objectives.
CPM – Cost Per Mille
CPC – Cost Per Click
CTR – Click Through Rate
KPI – Key Performance Indicator
CPR – Cost Per Result
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