Cost per impression is the cost that must be incurred to pay for each advertisement that appears to users, CPI is one of the advertising cost metrics that advertisers or digital marketers must know. This cost is also often referred to as CPM or cost per mille.
Through CPI calculations, it can give an idea of whether the campaign was successful or not. Therefore, it is important for you marketers to know the calculation of cost per impression advertising.
Come on, keep on reading Erzedka's article this time because we will discuss details starting from calculations to how to improve it!
What is Cost Per Impression?
Cost per impression is the cost incurred for each ad display that appears in front of users or on web pages. CPI is also often called cost per mille or cost per thousand. CPI is usually calculated before the campaign is carried out and is used to determine the cost and ROI (return on investment) of an online campaign.
With CPI, businesses can compare how ROI is between online advertising on websites or applications and traditional ones such as using posters or brochures. Ads from CPI don't need to be clicked, it's enough to display and be seen by the user then it is included in the impression or impression.
According to the TalentLyf page, pay per impression is an internet marketing advertising model that determines how payments will be made each time an ad that you create is displayed. With this method, advertisers can pay for the total ads that appear on the publisher's website. Generally, the price set is usually per thousand impressions.
PPM is a type of advertising that offers relatively cheaper prices than PPC advertising. Pay per impression is a great method for companies or organizations that want to increase brand awareness and have no goal other than getting their name known to more people.
Basically, the way pay per impression advertising works is the same as traditional advertising. If in traditional advertising you buy ad slots in magazines, television, newspapers, radio, and so on, in PPM you buy ad slots on websites.
If you create an ad using the PPM method, the advertising fee rate that you create is only based on the number of visitors who see the ad, not how many visitors click on your ads.
How Pay-Per-Impressions Works
To be able to advertise online, you can buy ad space or ad slots on social media (LinkedIn, Facebook, Instagram, YouTube, Twitter, search engines, digital websites or applications.
Apart from these platforms, if you have a website with high traffic, you can also monetize the website by selling ad slots there. With PPM, calculating advertising costs is much easier because the value of ad impressions is more certain on your site.
When is the Right Time to Use Pay Per Impression?
Here are the right times when you should use pay per impression:
1. Brand Awareness
Advertising is the right marketing strategy to increase sales and brand awareness. So, if you are aiming to make a name for yourself, then this is a good time to use PPM.
2. Events
Events such as concerts, festivals, webinars and conferences will not be successful without an audience or visitors. Therefore, many companies rely on PPM to disseminate information about the events they create. That way, there are more opportunities to get publications and purchase tickets.
3. Product Launches
Let's assume your company has just released a new product or service. Of course, people won't know about this unless you promote and advertise the product, right?
Therefore, pay per impression can help your company increase the introduction of your company's new products and services.
Why You Should Calculate Pay Per Impression
Pay per impression is an important measure that marketers must know to find out how effective the advertisements they have posted are. By calculating the PPM, they can find out the cost of the online marketing campaign rates they make.
Campaigns are one of the effective promotion strategies to increase brand awareness by business people. Therefore, many businesses take advantage of this advertising feature to increase their brand awareness and brand recognition.
How to Calculate Pay Per Impression
After understanding how important it is to advertise with PPM, now let's discuss how to calculate pay per impression.
To determine PPM, you simply divide the total campaign capital by the number of impressions using the following formula:
PPM = Total Campaign Spend Number of Impressions X 1,000
As an example,
- Your ad spend is $2,000 ÷ 750,000 impressions X 1,000 = $02.66
- Or, you can also calculate it by subtracting the other values in the equation:
- Total Campaign Cost = Total Impressions 1000 x PPM
- Total Impressions = CPM Campaign Fee x 1,000
Advantages and Disadvantages of CPM
1. CPM advantages
Even though CPM (cost per mile) looks less profitable because visitors don't click on ads but advertisers still have to pay, CPM still has several advantages that businesses will get, including things like.
a. Can increase brand awareness
At the beginning of starting a business, instead of competing for a purchase, it's better to focus on introducing the business to potential customers.mThe cost per impression advertising model is the right solution for businesses that want to increase brand awareness, especially for businesses that are just starting out.
With CPM, your business will often appear in front of potential customers, so they will slowly get to know your brand. This is where consumers will start to become aware and find out more about your business.
b. Being able to reach the right audience
CPM ads are also able to help businesses reach the right audience, this can be done by placing ads on two sites with different demographic focuses.
For example, first you post on a site with a demographic of 20s, while the second site is a demographic of 30s. After that you can compare the results and see which one has higher prospects. That way you can find the right target market and be able to adjust your next marketing strategy.
c. More affordable
The ad model between CPM or CPI with CPC has a lower price. The CPM model has the potential to generate more clicks and actions from users than other models at the same cost.
For example, you pay $2 for 1,000 impressions, while with the same cost on the CPC model, you pay for 50 clicks on an online ad. After reaching 50 clicks, the ad will stop showing.
In the CPC model, you definitely get 50 clicks. However, if you use the CPM model from 1,000 impressions, you have the potential to get more than 50 clicks.
2. Lack of CPMs
The click per impression (CPI) method can indeed improve the appearance of ads on better sites. However, one of the challenges is that these sites are often vulnerable to fraud.
Generally, these sites can introduce inaccuracies in CPI calculations by loading ads thousands of times without actually being seen by many visitors. Especially if you use video as an advertising medium, this can be detrimental because the costs incurred are also high.
How to Increase Cost Per Impression
After knowing what the advantages and disadvantages are, now is the time to improve CPI performance. Below are several ways to increase cost per impression that can be done.
1. The right target audience
Choosing the right target audience can help improve ad performance and optimize CPI methods. In selecting target audiences, advertisers must match their brand, including demographics, interests, behaviors, and location.
By doing the right targeting, you can serve ads to users who are potentially interested in the products or services you offer.
2. Quality of content
Make sure the content displayed in the ad has high relevance to the target audience. Pay attention to their needs, interests and problems and then create interesting and useful content.
Relevant content is more likely to attract attention and motivate users to engage with ads. Also add attractive visuals such as pictures or videos to influence their attractiveness.
3. Choose the right platform
Selection of an appropriate advertising platform plays an important role in optimizing click per impression. There are various advertising platforms such as Facebook Ads, Google AdWords, and LinkedIn Ads.
Each platform has different targeting features and different users. Therefore, advertisers must choose the right advertising platform according to the desired brand and target audience.
How to Calculate CPM?
Besides understanding how to increase CPI, you also have to know how to calculate it. To calculate the cost per impression, some data is needed, including:
Total impressions: 10,000Total clicks: 500Ad Fee: $100The first step is to calculate the CPM (Cost per Mille or cost per 1,000 impressions)= (Advertising Cost / Number of Impressions) x 1,000= ($100 / 10,000) x 1,000 CPM= $10
Next is the CPC calculation or the cost per click.
Ad Cost / Number of Clicks= $100 / 500 CPC= $0.2After getting the CPC, then we will calculate how much the CPI is.CPI = CPM / (Number of Clicks / No. of Impressions)CPI = $10 / (500 / 10,000) CPI = $10 / 20 CPI= $0.5
In the example above, the cost incurred for each impression that appears or the CPI costs is $ 0.5. The lower the CPI value, the more efficient your advertising costs are in getting impressions and interactions from users.
Do you understand what CPM is?
Up to this point, you already understand better what CPI is? Cost per impression is the cost incurred for each ad display that appears in front of the user.
CPI is calculated by dividing the total advertising costs by the number of impressions obtained. That way you will get an idea of the cost efficiency of getting ad views regardless of the number of clicks or user interactions.
Apart from paying attention to the ads that will appear on user pages, it is also important to ensure that your business has an official website that users can easily access. Make sure to use a domain and hosting from a trusted source.
Conclusion
Pay per impression really helps you in carrying out campaigns to increase brand awareness or when releasing a new product or service. By using the right keywords, you can reach all of the target audience you want to reach.