How To Calculate CPM

In case you are wondering how to calculate CPM as a publisher or an advertiser, you are not alone in the struggle. There are so many advertisers and publishers out there doing the same thing.

The reason is simple and straightforward. On the advertiser’s side, they want to know their potential cost of acquiring or buying a certain number of Ad impressions or how much they are going to spend to get a certain amount of impressions for an advertising campaign.

Publishers, on the other hand, want to know how much they will get paid for selling a certain number of impressions generated from their page views.

So technically, it is very important to calculate your CPM both as a publisher and as an advertiser in order to know your potential cost of advertising.

In this blog post, I will focus on teaching you how to calculate your CPM for your advertising campaign as a publisher and how to calculate your CPM for potential earnings as a publisher.

So let’s get into it…

Defining what is CPM?

CPM (Cost per 1000 Mille) is simply an advertising pricing model which simply means the cost per 1,000 impressions. This is the cost an advertiser pays for buying 1,000 impressions or views per ad.

Also, it represents the amount of money a publisher is paid for selling 1,000 impressions for their advertising space.

How to calculate CPM Cost as an advertiser

As a good marketer, it is always good to know the potential ROI on investment before putting in your Ad money. This also applies to your CPM advertising campaign.

As a marketer or company, here is how you suppose to calculate your CPM cost before starting your Ad campaign.

Doing the math

The cost of the advertising campaign is divided by the number of desired impressions and then multiplied by 1,000 to get the cost of advertising (2,500/500,000) x 1000 = $5).

In the above case, the advertiser or the company will have to spend $5 per 1,000 impressions on their ad campaign with a budget of $2,500.

As an advertiser, your CPM will be set by the ad network or a publisher (Blogger or website owner). It’s only in real cases the advertiser will be given the opportunity to negotiate their CPM rates.

Also, Real-time bidding helps to determine the actual amount you are going to pay for 1,000 impressions. In any case, the formula for calculating your advertising campaign cost is (Total cost of advertising campaign / Desired impression X by 1,000).

How to Calculate CPM as a Publisher

As a publisher, you would want to calculate the potential earnings based on your predicted number of impressions per month. Even though the CPM formula is the same, your CPM earnings are calculated a bit differently from the way advertisers calculate their cost of CPM rate.

Here is how you need to calculate your potential earnings considering the ad networks will have to deduct a percentage of your actual earnings.

Your CPM earnings solely depend on the number of impressions generated per month from your website or blog. In the above case, we assume the publisher’s blog or website is able to generate 500,000 impressions per month.

If you are selling your ad inventory directly to advertisers, you will set your CPM rate and ask advertisers to pay which will earn you all the income.

In case you sign-up with an Ad network, you will have the advantage of having 100% fill rates but will also have to forfeit some percentage of the revenue to the ad network.

Our Ad Network (AdsTargets) for example pays publishers from 80% to about 85% of the revenue generated from the advertiser’s income to ensure the publisher’s revenue is maximized.

CPM Calculator

To make things easy for both advertisers and publishers, we have created a CPM Calculator for easy calculation of your CPM cost and CPM earnings for advertisers and publishers respectively.

How to Maximise your CPM Campaign

To maximize your CPM campaign, you need to consider putting some strategies to use. Strategies that will enhance the performance of your campaigns and yield the maximum ROI for your CPM advertising campaign.

Of course, there are some factors that influence these outcomes such as the demographics of your audience, the ad network, and the cost of your campaign all will have a significant effect on the visibility of your ad campaign.

Here are a few things you need to do

• Do audience research to determine the size and specific target audience
• Choose your advertising platform carefully
• Consistently optimize your ad campaign
• Evaluate your campaign periodically to check to ensure your ROI is maximized
• Adjust your target audience demographic periodically when needed.

All these efforts to optimize your ad campaign ensure your ad budget is channeled only to what is working minimizing lost and maximizing your advertising ROI.

Platforms such as Google Ads will recommend adjusting your campaign almost every day to ensure your campaign achieve a good quality score.

Conclusion

Calculating your CPM cost and the potential earnings will always put you in a better position to know how much your campaign will gain or rather profit compare to what you are going to spend.

This will not only lead to better decisions making but will help you maximize your entire business profit as a company.

Publishers will also make more money if they are able to estimate their potential earnings while comparing ad networks and their potential number of impressions.

If you have ever done your CPM calculations before or during your campaigns, let us know how it has impacted your advertising campaign in the comment section.