What is CPM and Why Should You Care?
CPM is actually one of the most important metrics when it comes to your digital advertising campaigns. It gives insight into your target audience, the competition for ad space, and how to allocate dollars between ad channels. It’s also the primary metric used by ad networks to cost out their ad space.
Understanding CPM will help you run campaigns that are a better fit for your intended strategy.
So let’s demystify this acronym!
CPM stands for Cost Per Metric, with “Metric” referring to 1000 impressions. In other words, CPM is the rate it costs for your ads to be shown 1000 times, on average.
Note that CPM is a metric that measures impressions, not reach. Reach refers to the number of unique individuals your ads are shown to, impressions refer to the number of times an ad was shown (even if to the same person multiple times).
CPM rates are heavily influenced by each advertising platform. Based on our data and overall trends in 2022, we estimate the following CPM ranges:
Meta Ads (Facebook/Instagram): $7-8
Google Display: $3-4
TikTok: $8-10
Competition can also play a significant role. During the holidays, CPM’s have been known to increase quite a bit. So, you can expect your CPM to fluctuate throughout the year.
Your target audience can impact CPM rates too. A more tightly defined audience can have a more expensive rate than a more broadly defined audience. For example, if you were targeting everyone over the age of 21 in Las Vegas, then the CPM would be less than if you were targeting everyone in Las Vegas that is over 21, is interested in craft beer, and has an affinity for dogs. The additional targeting parameters drive up the cost of impressions.
CPM and Your Advertising Strategy
For a strategy that is focused on maximizing the number of people that see your ads, it makes sense to leverage low CPM targeting designs and/or channels. Here, your ads might look like taproom pictures combined with broadly focused messaging about your constantly rotating tap selection.
For strategies that call for a higher-quality impression within a tightly-defined audience, you should expect a higher CPM. Here, your ads would be more defined and reflective of your audience. For example, you could run ads to dog lovers on Instagram, using photos of dogs having fun in your outdoor space.
Layering the two strategies together can be very impactful. Consider leveraging low-CPM tactics to get your branding in front of lots of people. Then, use high-CPM tactics to share specific value related to a specific audience.
It isn’t the only factor to consider, but understanding CPM can shine a new light on your advertising strategy. If you’d like to learn more about your metrics and how to improve your ads, we can help!