A Marketer’s Guide to CPM Across Social Media
Updated April 24, 2023.
Cost per thousand (CPM) has evolved to be called cost per mille ("mille" is the Latin word for "thousands"). Marketers use this term to denote the price of 1,000 advert impressions on a single web page. When a website publisher charges $5 CPM, it means the advertiser must pay $5 for every 1,000 advert impressions.
It's important to stay abreast of the CPM analytics for all your major platforms because it determines the cost-effectiveness of your advertising campaigns. You can compare the effectiveness of the platforms you're using and the effectiveness of old versus new campaigns.
How to Calculate CPM
To measure CPM, you need to divide the total cost of the campaign by the number of impressions. You then multiply that amount by 1,000 to get the CPM rate. Here is the formula:
CPM rate = total campaign cost / number of impressions x 1,000
Let's look at an example:
Your ad campaign costs $200. Your total number of impressions is 3,000. Your calculation would look like this:
CPM rate = $200 / 3,000 impressions x 1,000
= 0.066666666 x 1,000
= 66.666666 ~ 67
= $67
Average CPM for Facebook, Google Ads, Instagram, and TikTok
The average costs for these different platforms are ranked below from the cheapest to most expensive:
Google Ads
Advertising on Google's Display Network ranges between $0.50 and $4 CPM, with an average of $3.12. This is very inexpensive when viewed within the CPM lens. If your aim is to build awareness of your products, Google Ads is a cost-effective option and provides a conversion tracking function to help you determine the success of your campaign. But if you're looking for more targeted campaigns, Google Ads may not be your best solution.
The average CPM for Instagram ranged between $2.50 and $3.50 for better-performing campaigns in 2021. The cost of Instagram advertising is determined by supply and demand because Instagram ads are sold in an auction environment. In general, Instagram performs better for campaigns focused on impressions and reach, and it appeals more to the younger generations.
TikTok
The average CPM for TikTok Ads is currently sitting at the $10 mark. TikTok is the new kid on the block—and is showing up the rest quite well, considering its higher cost. Just remember to do your research and follow the guide to TikTok advertising. You can also consider adding your WooCommerce website to TikTok.
Tip: It's important to make sure your target market uses TikTok and Instagram before spending money to advertise on these platforms. They appeal more to the Millennials and Generation Xs.
The average CPM on Facebook across all industries is $14.40. This has increased from $11.54 in 2021. Facebook clearly takes the lead with CPM, because of all the social media platforms, Facebook appeals to the widest age range—which probably contributes to its high cost. You can consider using tools such as Facebook's campaign budget optimization to assist with high advertising costs, but ultimately, Facebook advertising like an e-commerce pro promises to get the widest reach.
How Marketers Leverage CPM
CPM is best suited to digital marketing campaigns that want to build awareness of a brand, product, or service. It's not suited to smaller, niche businesses that are trying to catch the attention of a small subset of the population. It also doesn't measure up if you need quantifiable results to back up your marketing dollar spend. If you want to create a strong foundation for a CPM strategy, you must know and fully understand:
- Your definition of a lead
- Your overall business goals (and how CPM will measure them)
- Your new strategy's goals
The most important thing to remember when it comes to CPM campaigns is that they must be run in tandem with other forms of marketing, such as using AI in advertising. They won't be as effective if they run in isolation.
Who Should Consider CPM Campaigns?
CPM campaigns are perfect for any business that's looking to improve its credibility by building brand awareness. If you own an e-commerce store, you first need to establish yourself within your target market before your audience will start to take you more seriously. This means that your customers need to be familiar with your brand already when you start your first CPM campaign.
A Final Thought...
CPM campaigns are inexpensive and can be highly effective if you use clever, well-written copy and striking high-resolution pictures. Also, watch your frequency: if you post too often, you could irritate the target market you're trying to reach. Your strategy must be planned carefully and skillfully for optimum results.
