Of online advertising: CPM, impressions and campaign cost

If this is your first foray into the world of online advertising, terms like CPM, CPA and impressions might seem foreign to you. They’re not as alien as you’d imagine, however. Let’s take a quick look and understand how these terms fit together.

  1. First off, impressions. Impressions are the views a fully loaded online advertisement gets. This does not involve any action from the viewer (clicks are not evaluated in this metric). It’s a commitment from the site owner to an advertiser that X amount of impressions will be served, over a specified time period. Knowing the number of days in a campaign would definitely help in calculating total impressions, so here’s a handy tool to ease things along.
  2. Campaign cost is easy enough. This is the total amount of money an advertising campaign requires.
  3. How do we measure cost of impressions? A widely used metric is CPM, or Cost per mille. This refers to the cost per thousand impressions.

A very handy tool would be this CPM calculator from ClickZ. Fill in two of the three required fields, and hit Solve. The remaining metric is calculated right away. So long as you have two of the three metrics mentioned above, an answer shouldn’t be too far away.

Not sure what industry CPM looks like? Here’s a CPM rate guide that should give you a fair idea of how the number should look like.

Finally, how about CPA? Cost per acquisition, which refers to the cost invested in getting a sales conversion.

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