Online display advertising is often traded on a CPM basis. But what does this mean? CPM means cost per thousand impressions. So if your CPM is £1, you are paying £1 for thousand times your ad is seen. The lower your CPM the more impressions you will get for the same budget. A budget of £10,000 spent at a CPM of £2 will secure 5,000,000 impressions. A budget of £10,000 spent at a CPM of £1 will secure 10,000,000 impressions. It’s worth pointing out that this does not mean you will actually reach 5m or 10m real people. Sometimes some people will see your ad twice, three times or even four times, depending on the level of frequency planned into your campaign. You could buy 10,000,000 impressions but actually only reach only 3m people, who would see your ad an average of 3.3 times. Managing this relationship between budget, cost, impressions and frequency is part of the role of the media planner.
There’s a nice little CPM calculator here.
