Basics of CPM Advertising Online

Advertising CPM online has become the industry standard for calculating the cost of advertisements. CPM stands for "cost per thousand" and refers to charging for advertising based on the number of impressions a site carrying an ad receives. CPM advertising can be highly effective if done properly.

How Did CPM Advertising Originate?

The "M" in CPM is the Roman numeral for a thousand. The terminology is taken from print advertising. There is no way to determine how many customers a print ad reaches, so advertising is marketed on the subscription base and readership of a given magazine or newspaper. The higher the subscription base, the higher the cost of an ad will be. This is how advertising CPM online works as well. The website where the ad is displayed does not guarantee any number of clicks but rather guarantees a certain number of visitors to the site per month.

How is CPM Calculated?

Cost per thousand is calculated based on the number of users to the site. For example, if the CPM rate is $8, then a site that draws a million visitors a month would have a CPM cost of $8,000. This is because the million visitors makes a thousand sets of thousand impressions.

Advantages of CPM Advertisements

There are many advantages of standard CPM advertising, both for the advertiser and the publisher. First, because CPM rates are per views, not per clicks, the advertiser pays the same no matter how many viewers actually click on their ad. This gets the advertiser to work hard to make the ad draw clicks. The result is a better, more effective advertisement. Internet advertising CPM users have found that text ads draw more clicks than graphic ads. Perhaps this is because Internet users are becoming tuned out to the myriad of graphic ads that are on the Internet today. For the publisher, this ensures that the ad is an asset to the website.

Another advantage to CPM ads is that they are usually relevant to the topic of the page. This is again because the advertiser is trying to dray click-throughs to their ad. By putting ads on relevant pages, they make sure that the people who view their ads are at least interested in their product or service. This is a major benefit to the publisher, because CPM ads do not detract from their site as much as other ad forms.

With CPM advertising, both the impressions and the click-throughs are carefully tracked, making it easy for the advertiser to judge which campaigns are the most successful. Proper and timely feedback is essential to ensure quality Internet advertising, no matter the form.

Continue to:  Some of the Limitations of CPM Advertising