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What is CPM Advertising?

Article Details
  • Written By: Kristie Lorette
  • Edited By: C. Wilborn
  • Last Modified Date: 05 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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CPM advertising is a type of online advertising, where a business or website owner purchases a specific amount of impressions. An impression occurs when an advertisement appears on a website. This type of advertising tends to be a more cost effective form of online marketing than cost per click (CPC) advertising, which charges the business or website owner for each time someone clicks on the ad rather than for the impression. CPM advertising is generally more cost effective because the advertiser pays a set fee per 1,000 impressions rather than a fee each time someone clicks on the online ad. The abbreviation "CPM" stands for "cost per thousand impressions" using the Roman numeral M for 1,000.

This type of advertising can take on a few different forms. The ad may be a banner ad, which appears on the side, top, or bottom of the website. Another form of CPM advertising is text-based ads. Again, the placement of the ads is typically along the top, sides, or bottom of the website where the ad is running.

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Not only does CPM advertising tend to be less expensive for businesses than CPC, but it can be more effective as well. A CPC ad may have a small number of people who actually click on it, leading to low click-through rates. A CPM ad can be more effective since visitors can glean information from it without having to click on it. CPM advertising works just by being present and does not require the person to click on the ad to get further information.

While CPM advertising does have its benefits over other types of Internet advertising, it does have some drawbacks as well. For one, CPM advertising packages are usually sold in bundles of 1,000 impressions, and different CPM ads may have different minimum bundle purchases. The challenge is that the minimum purchase amount may be more than the company needs, making it fall outside of the marketing advertising budget. For example, the fee may be $5 US Dollars (USD) for every bundle of 1,000 impressions. When the minimum purchase amount is 1 million impressions, the cost can quickly add up.

The minimum number of impressions does vary from company to company. If the rate on one company is too high, a businesses may want to consider other options. It is also important to consider the placement of the ad. Businesses want to ensure that the ad is appearing or making an impression on websites that ideal customers are visiting and reading. While cost should be a consideration, it is just as important to target the ad to reach the customer base of the business.

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