Instead of paying for each and every individual click, online marketing came up with a new term called as CPM. CPM stands for cost per Mille where Mille which is symbolized as ‘M’ is derived from Latin word which means thousand. As a result cost per mille in short CPM is also referred as cost per thousand impressions.
What is Cost per mille ( CPM )?
Cost per mille ( CPM ) or cost per thousand impressions is defined as the cost that has to be paid by the advertiser to publisher for every thousand impressions.
So if you want to display or publish your advertisement on any website and for the same if publisher says that the CPM or cost per mille is 2$, that means that you need to pay the owner of the website or the publisher with 2$ for 1000 impressions or views.
How cost per mille or CPM is calculated?
Cost per mille is the total cost that you pay for one thousand impressions to the publisher of the website on which your advertisement is published.
we use the following mathematical formula that is mentioned below to calculate cost per mille or cost per thousand impression,
cost per impression or CPM = cost per advertising / number of impressions
what all factors on which CPM depends?
all the factors that impact cost per click impacts cost per mille too. There are many factors on which Cost per mille or cost per thousand impressions depends and among them the most important factors that highly impact cost per mille are
1. Quality score
2. AD relevance
3. Click through rate
QUALITY SCORE:
Quality score is used by Google to rate the quality and relevance of both your keywords and CPC ads. Quality score is indirectly dependent to the amount that you pay to the publisher. Google decides your website quality score and Depending upon your quality score, you need to pay to the publisher.
Higher the quality score lower the cost you need to pay to the publisher and lower the quality score higher the cost that you need to publisher.
AD Relevance:
When we surf through web we always come across so many advertisements, but do all they have same impact?
Definitely no, users or online readers just click on the advertisements that are relevant to them. So placing advertisements that are relevant to them has the utmost importance. If the advertisements are relevant, then they click on advertisements which redirects them to your website and depending upon the quality score, there is each and every possibility that the visitors can be turned into your customers.
CLICK THROUGH RATE:
As studied above users or online readers just click only on those advertisements which they feel relevant to them. Click through is defined as the ratio of the number of visitors to the total number of views. Through improving your CTR, Google would think that your Ads are more relevant to users because good CTR means users actually click your Ads.
So click through rate is directly dependent on Ad relevance, if your advertisements are relevant in readers point of view then they click on your advertisements that you have placed on publisher website. if in case the advertisements are not relevant at any cost, then they simply go through them.
CONCLUSION:
Cost per mille or cost per thousand impression is normally used to calculate bulk views or impressions. Instead of paying for each impression, it is used to pay for thousand impressions at once. In general, the cost that we pay to the publisher is dependent on certain factors such as quality score, click through rate, Ad relevance etc. so as aforementioned, these factors affect cost per mille or cost per thousand impressions.