What is CPM?
Cost Per Thousand (CPM) is a key metric in digital advertising that measures the cost to display an ad 1,000 times (known as impressions). It’s a vital metric used across platforms like Facebook, Google Ads, and Connected TV (CTV) to evaluate the efficiency of ad spend and overall campaign performance.
Example: If you spend $10 on an ad campaign and it is shown 2,000 times, your CPM would be $5.
“CPM is a fundamental metric for advertisers focused on increasing brand visibility without overspending.” – Marketing Expert.
How to Calculate Cost Per Thousand (CPM)
The formula to calculate CPM is:
CPM = (Total Ad Spend / Total Impressions) x 1000
For example, if your campaign costs $500 and has 100,000 impressions, your CPM would be:
CPM = ($500 / 100,000) x 1000 = $5 CPM
5 Best Tips for Lowering Your Facebook and Google Ads CPM Today
- Target Niche Audiences
Narrow down your audience by focusing on specific demographics or interests. This reduces competition and leads to lower CPMs as you are reaching a more relevant audience.
Pro Tip: Use Facebook’s Audience Insights to find precise segments, and target long-tail keywords in Google Ads.
“Niche targeting reduces competition for impressions and increases engagement, which drives CPM down.” – Third-party Expert. - Optimize Ad Creative
Engaging visuals or videos improve click-through rates, reducing CPM. Regularly A/B test different ad creatives to find what resonates with your audience.
Pro Tip: A/B test static images, videos, and carousel formats to see what drives the best engagement. - Leverage Retargeting Campaigns
Retargeting audiences are already familiar with your brand, leading to higher engagement and lower CPMs. By advertising to people who have visited your website or interacted with your content, you increase the chances of conversion.
“Retargeting boosts ROI by focusing on users already engaged with your brand, which helps lower CPM.” – Marketing Study. - Experiment with Ad Placements
Explore different ad placements like Instagram Stories, Google Display Network, or Connected TV. Less saturated placements often come with lower CPMs and can offer unique ways to reach your audience.
Pro Tip: Try placement testing in both Facebook and Google Ads to see where your audience engages the most. - Adjust Bidding Strategies
Whether you’re using manual or automated bidding, experiment with different strategies like “target cost” or “cost caps.” These adjustments can help you get the most impressions at the lowest cost.
Pro Tip: Automated bidding often finds the most cost-effective impressions, but manual bidding can offer more control over CPM for seasoned marketers.
CPM in Connected TV (CTV)
Connected TV (CTV) offers advertisers a way to reach engaged viewers on platforms like Hulu, Roku, and YouTube TV. CPMs on CTV platforms can often be lower than traditional TV ads due to their advanced targeting options and greater reach flexibility.
“CTV campaigns tend to offer lower CPMs than traditional TV, with the added benefit of precise audience targeting](source-quote-link).” – Connected TV Expert.
Ready to reduce your CPM and maximize your ad budget? Contact Anderson Collaborative today for expert strategies on optimizing Facebook, Google Ads, and Connected TV campaigns.
