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The CPM (cost per mille) indicates the average cost for a thousand impressions in an advertising campaign. The formula to calculate the CPM is :
CPM = (Total Cost / Total Impressions) x 1000
There is no definite answer to determine what is a good or bad CPM. Most online advertising platforms run through auction bids and algorithms greatly impacted by budget, industry, niche, location, competition, campaign goal, audience size, and so on. This means that what could be a great CPM for a company could be a bad one for another based on the environment both companies are competing.
The best ways to improve CPM, for most platforms, are to improve:
● Content quality
● Content copywriting
● Auction bid / Bid type
● Audience targe
Three groups of factors can impact the CPM:
● Environment factors: location, competition, audience size, industry…
● Budget/Bidding factors: How much are you and your competitors willing to pay for the impressions.
● Ad quality factors: How relevant is your ad, how performing is your creative, and how engaging is your ad. The most engaging your Ad is, the most the algorithm will push it for lower prices.
For marketers, calculating CPM and comparing CPM between campaigns is a good insight into ad quality, performance, and potential, as well as targeting relevancy.