The CPM pricing model was first introduced in 1995 and significant developments in internet advertising started to arise in a short span of time. This ad pricing model that is quite scalable meant that both advertisers and publishers could profit and measure their profits in the world of digital advertising.
Thanks to CPM model which is the abbreviation of Cost Per Mille, advertisers pay publishers when online advertising contents are viewed 1000 times. It enables advertisers to ensure that the target audience comes into contact with the advertisement. The fact that how many times the target audience who visits the platform of the online publisher views banners or content-based ads is the foundation of the CPM model. It means that advertisers buy a CPM ad for each view that is performed by a web visitor.
Therefore, 30.000 views for a banner ad are expected when a 30.000 CPM-based ad is purchased. However, it is worth reminding that the 30.000 ad-views are not performed by 30.000 unique visitors. CPM advertising, especially preferred frequently in affiliate marketing, is a pretty effective model depending on the purpose of an ad. Here are the other important details about the CPM advertising…
Why CPM Advertising?
CPM can be a quite convenient method for an advertiser who desires that an ad content reaches as many people as possible. CPM advertising is a great opportunity particularly for advertisers who aim to create a brand equity to reach potential customers. In this way, it can be possible to increase visibility and hence the brand awareness.
Because each ad impression that is performed in the case that the content of an ad matches the framework of the visiting audience will bring significant advantages for the branding process along. At this point, it is crucial to notice that it is necessary to ensure that the ad content is demonstrated on a website highly related to the content which means that the ad reaches the correct audience. It will be possible to reach high conversion rates, in this way.
How CPM is Calculated?
In order to calculate the cost arising from the one thousand impressions of an ad, it is required to divide the budgeted amount for the advertising by the total ad impression number. Then the resulting number of this mathematical process is multiplied by 1000. So as to provide an example, let’s say $300 will be spent for an ad whose impressions will be 50.000 on a platform. Accordingly, following mathematical operation must be performed to calculate CPM: ($300/50.000)x1000. The result of this operation is equal to CPM, which is $6.
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