Cost per mille (CPM), is a commonly used measurement in advertising. It refers to the cost an advertiser pays for one thousand views or impressions of an advertisement.Like any metric, benchmarks can be helpful to guide your experiments and success.
For growth marketers looking for a “good” CPM rate, how you define “good” could depend on your industry and where you are in your online advertising journey. It also primarily depends on whether you’re a buyer or seller.
Typically when we run ads we see CPMs range from $7–15. This tends to be higher than other advertisers because we like to use very small, targeted groups. The more targeted (specific) the group of people you’re advertising to, typically the more you’ll end up paying. We’ve seen CPMs as low as $1.50 to just advertise to anyone in the network.
The first time we ran ads in our mobile app, we made $0.20 CPM. That was pretty depressing, especially given that we were coming from the buyer’s side. We’d consider anything over $5 CPM “good” on the seller side, and have seen the metric go up to $15 CPM for incentivized video ads (eg when you’re in a game and you get coins for watching a video).
4 Ways to Improve CPMs
Top of funnel metrics are levers to pull when thinking about how to optimize your overall funnel. Here are 5 things you can do to improve your CPM rate.
1. Think strategically about placement.
Where your ads are matter a ton. For example, if you’re a B2B SaaS product that sells to engineers it might not make sense to advertise on places your audience isn’t likely to be. For example, we recently ran cross-channel tests for a customer that sells to engineers. We learned LinkedIn isn’t a top-performing channel for them. We learned engineers get hit up on LinkedIn from recruiters on a regular basis (maybe a little too much?) and therefore don’t spend a lot of time on the platform. Instead we focused on more niche channels like Stack Overflow.
2. Check that your geo-targeting isn’t too narrow or broad.
Your location targeting should be wide enough to reach the appropriate audience, but narrow enough to exclude irrelevant audiences.
3. Test and understand performance based on device placement.
For example, if you have a desktop app or e-commerce store and a not-so-friendly mobile UX, does it make sense to run ads only on desktop?
4. Understand and prepare for seasonality’s impact on CPMs.
For example, in November and December when the gifting industry and e-commerce starts ramping up spend you can expect CPM rates to push up. If your industry has its own seasonal impacts you can forecast and plan with the expectation that the market will have less supply and more demand.
How much do CPMs matter?
At Lightning AI we prefer to focus on optimization metrics further down the funnel, such as a monetization event like purchase, or at least a signup, registration, or install event. Here are few examples of events down the funnel that should carry more weight in evaluation funnel metrics: Cost Per Lead Cost Per Install Cost Per Unique Purchase Lifetime Value to CAC ratio ROAS (return on ad spend)
A “good” CPM rate can really be anything that results in acquiring more customers at a price that helps your business reach profitability in the smallest possible time period.