Cost per impression or cost per thousand impressions is a term used traditionally in digital marketing or online advertising that relates to what the advertiser is paying every time an ad is advertised. E.g. an ad of Xyz company comes up on youtube or through google ads, the money that the company is paying for each display of ad is referred to as cost per impression.
Cost per impression (CPI) and pay per click (PPC) are a few parameters used to evaluate the circumspect and lucrativeness of online advertising. In conventional media, like radio and television and print, the advertising is based on estimated viewership or readership similarly in internet advertising, the business is conducted on CPI. In short, some business wants to advertise their offerings online, the money they decide to pay per one thousand views to the advertising medium is called cost per impression (CPI).
CPM and CPI
CPM is the cost per thousand impressions whereas CPI is the cost per impression. The sole difference is that CPM is conducted taking a thousand impressions as a whole. While in CPI you decide the money based on each impression. E.g a CPM of $10 means you will pay $10 to the advertiser for every thousand impressions and a CPI of $0.5 means you will pay the advertiser $0.5 for every impression.
What is an impression?
Displaying a paid ad on any webpage is called an impression.
A webpage may contain more than one ad that means more impressions. The advertising agency will charge you for all those impressions. Now there are some checks placed on these impression views. E.g. a webpage has four impressions and the user decides to refresh the page, the same impressions are displayed but they will still be counted as four impressions. Counting them as 8 impressions will be considered as fraud. Similarly, if the agency decides to place your ad at the bottom of the webpage for which the user has to scroll but they don't, hence they won’t see your ad and that cannot be counted as an impression.
CPI can be calculated through the following formula:
CPI = advertising cost / number of impressions
CPC and CPI
CPC stands for cost per click. This is another parameter for accessing online advertising. In CPC,
you pay every time your ad is clicked. A CPC of $0.4 means that you will pay the advertising
agency $0.4 every time your ad is clicked, say your ad is clicked 600 times, you will be paying
When to use CPI
Advertising your ad using CPI is effective when you want to raise general awareness, this means at least a certain number of people will see your ad. If you want people to know about your brand, just that your exists and there should be visibility you can opt for advertising through CPI.
CPI is an efficient technique when your offerings are worth a hefty sum. This won’t bring any direct traffic to your business but can raise awareness among a certain number of people and bring indirect traffic.
According to data of 2018, the average CPM rates were $2.80 whereas the average CPC rates were $0.75 on google ads. A jump of 63% was observed as compared to the year before that i.e. 2017, the average CPM rates were $1.80. In 2018 the average CPM on Youtube Ads was $9.68 and the average CPM on Facebook Ads was $7.19.
People usually prefer CPM while advertising through Google ads and Youtube ads and CPC for Facebook ads. The reason for this is that users are mostly busy doing personal stuff on Google and Youtube, looking something up or watching videos, they don’t generally click on the ads and open the business webpage because it will be a waste of time. In contrast, Facebook is more of a leisure time social media platform, the chances are high that a user will click on your ad and visit your business webpage.
Studying statistics from Google Adwords, Facebook Ads and Linkedin Ads, it can be easily said that CPC is clearly the way to go with your marketing campaign. You’ll only be paying every time someone clicks your ad that is a beneficial thing.
Click through Rate
Another important parameter for evaluating your marketing campaign is the Click-through rate (CTR). It is calculated by dividing the number of clicks by the number of impressions.
As an internet marketer, you have to take all these things into account before invested your client’s money into something. Besides all these parameters, there are a few other parameters that also need to be taken into account since all of these are correlated. You simply cannot rely on one parameter and trust, there are a ton of other things that have to be taken into account as well. Looking at only impressions or clicks cannot help you have a successful campaign which will eventually lead to a flop online business. Both of these parameters, impressions, and clicks have to be worked on side by side.