The cost an advertiser charges based on the number of people who have seen an advertisement online.

Cost per impression (CPI), also frequently referred to as cost per mille (CPM), is a metric used in advertising to measure the cost an advertiser incurs each time their ad is displayed to a potential customer.

Here’s a deeper look at CPI/CPM:

  • Focus on Displayed Ads: Unlike CPC (cost per click) which focuses on clicks, CPI/CPM centers on impressions, which is simply how many times your ad is shown.
  • Cost Efficiency: It provides a way to gauge how efficient your ad campaign is in terms of simply getting your ad seen by a target audience.
  • Calculating CPI/CPM: The formula is:
    • CPI/CPM = (Total Advertising Cost / Number of Impressions) x 1000 (for CPM)
    The 1000 conversion factor is used because impressions are often measured in thousands. For example, if you spend $20 on an ad campaign and it receives 5,000 impressions, your CPM would be ($20 / 5,000) x 1000 = $4. This means you pay $4 for every 1,000 times your ad is shown.
  • When to Use CPI/CPM vs. CPC: While both metrics are valuable, they serve different purposes. CPI/CPM is ideal for brand awareness campaigns where simply getting your message out is a primary goal. CPC is better suited for campaigns where clicks and driving traffic to your website are crucial.
  • Benefits of Tracking CPI/CPM:
    • Reach Analysis: It helps assess how many people are seeing your ads, giving you a sense of the campaign’s reach.
    • Budget Optimization: By comparing CPI/CPM across different placements or demographics, you can identify the most cost-effective ways to reach your target audience.
    • Benchmarking: You can benchmark your CPI/CPM against industry averages to see how your campaign stacks up.
  • Limitations of CPI/CPM: It doesn’t necessarily tell you how well your ad is performing in terms of engagement or conversions. Just because people see your ad doesn’t guarantee they’ll remember it or take action.