What Does CPM (Cost per Mille) Actually Mean?

The growth of any company these days heavily relies on its digital marketing strategies. However, for an effective digital marketing strategy, certain metrics must be constantly analyzed. Among these metrics, monitoring the CPM of the ads is especially important. But what does CPM mean, and how does it exactly work? 

For the answers to your queries, read on as we discuss CPM and its importance for a business.

What Does CPM Mean?

The full form of CPM is Cost per Mille. It is also known as the cost per thousand impressions. It can be defined as the money a business spends for a thousand ad impressions. Impressions are the number of times your ads are viewed by users. The more views you get, the more your brand’s reach and, hence, more chances for sales.

By monitoring the CPM of an ad, a company can evaluate the cost-effectiveness of its marketing campaign. Besides this, the metric also helps you evaluate optimal budgets for running ads on various platforms.

How Can CPM Be Calculated?

CPM can be calculated using the following formula:

CPM = (cost ÷ impressions) × 1000

So, if you’re spending $1000 running an ad that receives 100,000 impressions, the CPM will be:

CPM = (1000 ÷100,000) × 1000 = $10

This means that for every 1000 views of your ad, you are spending $10. Now, you may be wondering what the generally good CPM value is. It primarily depends on the platform you’re running the ad on.

For more clarity, let’s take the example of Facebook ads. The average Facebook CPM for technology-based services was $9.98 in 2023. So, any CPM value significantly higher than that for similar product/service ads would be a red flag. 

 

Ways to Lower the CPM Value of Your Ads

Now that you’ve learned what CPM means and how it can be calculated let’s understand how it can be lowered. You can do this by adjusting the following factors:

Target Audience: The more general your audience, the more you’ll have to pay for your ads. By making your ads more relevant to a specific audience, you can pay less while still getting more engagement. 

Timing and Placement: Running ads on multiple platforms is costly and often unnecessary. Only place ads on the best-performing platforms that guarantee significant returns. Also, be strategic with the timing and frequency of the ads by analyzing peak interaction hours.

Appeal: An aesthetically pleasing ad relevant to the target audience will attract more people. This will encourage user engagement and views, lowering the overall CPM.

Bid Strategy: Bid strategies are always a great way to adjust a CPM value. You may have to experiment with a few in the beginning to find the one that works best for you. This may take time, but experimenting is important for all digital marketing strategies.

Conclusion

If you’re looking to run ads for your business online, CPM is a crucial metric to monitor. Now that you know the answer to “What does CPM mean?” you’re all ready to get started,

However, if you still think you need more guidance, contact me today! I’m Alex Smale, and I can help you plan a highly effective digital marketing strategy for your brand. My years of experience as a digital marketer, business consultant, and developer have helped boost the growth of many businesses.

How close are we to having a ‘Holodeck’ experience?

The cutting edge technologies of both artificial intelligence and mixed reality have been developing rapidly over the last 10 years or so.

With new technologies such as ChatGPT 4o and Apple’s Vision Pro hitting the market. We’re getting close to these technologies hitting a certain level of maturity and useability in day to day lives.

Open AI recently demonstrated their new voice model for ChatGPT, which allows the user to have realistic and engaging conversations with an AI agent.

Apple’s new headset now delivers a level of visual fidelity to the general public in mixed reality that now makes it a viable replacement for a traditional computer monitor.

But now these two technologies are starting to come together in ways that really does have the potential to change the way we entertain ourselves, educate ourselves and interact with the real world.

In this article, I’ll break down five exciting ways that these technologies are being used together to show where the sharp end of the spear is in consumer technology.

The Evolution of AI and VR

Before we get into the specific use cases of the intersection between artificial intelligence and virtual reality. We should probably have a quick look back at the trajectories of these two technologies to better understand how these paths have collided.

For decades (until what feels like yesterday), AI has been the backbone of science fiction.

There have been plenty of pseudo examples of it being used where many wouldn’t have even noticed.

For example, in my computer game development days, we would say that the NPC’s (non-playable characters) and enemies had AI. When in reality, they were just following a pre-determined path or set of instructions.

There was nothing intelligent about them.

Voice recognition systems such as Siri were the first noticeable experience that many of us had with AI, and our first appreciation of the benefits it could bring.

Starting as an AI initiative project funded by DARPA (Defense Advanced Research Projects Agency) in 2003. The initial concept was to help military personnel with making decisions in the office, which developed into a system called CALO (Cognitive Assistant that Learns and Organizes).

It would arrange meetings for staff, provide documents to attendees, and even cancel and reschedule if someone couldn’t make it.

Clever, but still fairly straightforward.

Along the way over the last few years, one of the biggest use cases for AI that we’ve heard about is autonomous cars. Robbing us of one of our last joys.

That’s not quite with us yet in the mainstream, although Tesla might disagree. But it’s certainly just around the corner, and we’ve been watching it develop over the last 10 years.

ChatGPT was released on the 30th of November, 2022.

Can you believe it’s only been that long?

Since then, AI has evolved at a meteoric rate. With multiple updates, improvements and clones, and we’re already worried it’s going to take all of our jobs.

The capabilities have blown our mind, and given us a real taste of what the future holds.

For me, one of the scariest examples was when the Alignment Research Centre was given access to an early version of ChatGPT-4 to test for ‘risky behaviours’. And then immediately found one, when they challenged the AI to overcome the Captcha test and it did so by hiring a human from TaskRabbit to do it.

Nope.

Virtual Reality Has Had A Slower Rise In Popularity

With virtual and mixed reality, the evolution has been a lot longer and steadier.

Starting way back in 1838 with the invention of the stereoscope by Sir Charles Wheatstone. We’ve long been fascinated by the concept of a more immersive visual experience using 3D.

The first ‘VR machine’ was created by cinematographer, Morton Heilig in 1956, and it was called ‘Sensorama’. It was more akin to Cineworld’s 4DX, with full color 3D video, sound, vibration and even smell-o-vision.

In more recent memory, a lot of us recall our first VR experience with Virtuality in the early 90’s. Featuring those enormous headsets and dalek-like seats.

With the exception of the Virtual Boy from Nintendo. Things were fairly quiet on the VR front until 2012, when Palmer Lucky knocked it out of the park with his Kickstarter campaign for the Oculus Rift.

Two years later, things got serious when Oculus was acquired by Facebook for $2 billion. For context, that’s a similar figure to what George Lucas was paid by Disney for the Star Wars brand.

Since then, VR has been a passion project for Mark Zuckerberg. And he sees VR/XR as the ‘new platform’. And by ‘platform’, the one before was the internet.

Now that Apple has launched a headset of its own, we all know that’s an indicator this new technology is here to stay, and it’s about to become a mainstream part of all of our lives.

Despite what the nay-sayers might think.

Three Interesting Intersections Of AI And XR

AI controlled NPC’s in VR games.

For a long time, non-playable characters in computer games have been dumb and annoying. Their appearance didn’t justify the same resources as the main character. So they looked basic and pixelated. And their vocabulary was usually restricted to a few choice phrases along the lines of “Excuse me. Sorry. I’m too busy to talk to you.”

But now? Now, thanks to technologies such as Unreal Engine 5, and ChatGPT’s voice model. In the virtual realm, NPC’s look incredible, with life-like features and animations. AND you can have a full blown conversation with them about anything you like.

No-longer will the background characters be little more than window dressing. Going forward, they will an integral part of the vast immersion on offer.

AI Assisted Shopping Using Mixed Reality

E-commerce is about to get a lot more interesting, and in the same breath, could this actually be the end of the high-street?

If you have no shame, you can now walk around a department store with your Quest 3 or Apple Vision Pro on looking at products.

The AI can recognise objects in front of you and go and search for them in online stores. Or it can go and find products that are very similar, based on it’s shape that it can recognise thanks to machine learning.

And then the real killer, you can order that product there and then and have it delivered to without having to carry it home.

Rather than buying it from the shop you actually saw it in.

AI Teaching Our Children In VR

Anyone with an 8 year old (or older) will attest that the children of today are almost cybernetic in their aptitude with technology.

With low pay, high stress, and long hours marking homework, it’s little surprise that we are already facing a significant shortage of qualified teachers across educational institutions.

Classroom sizes are growing year on year, and with it, the level of quality education is at risk.

Combine that with the population collapse crisis we’re now facing and a general lack of able workers post-Brexit. And it’s not hard to see how this use case could become a vital part of our future lives.

Rather than it being seen as a poor replacement for a real teacher. VR learning experiences powered by an AI teacher working one to one with every child would likely become a far better solution for tailored education than any real teacher trying to coach a class of 30+.

Not to mention how much more fun and interesting the learning experience could be in VR. With fun interaction, beautiful locations and constantly tailored challenges based on the child’s progress.

Over the next few years, one thing is for sure. As these technologies become an integral part of our daily lives, these use cases will explode in ways we can’t yet imagine.

They certainly have the potential to alleviate some of the shortages of people we’re already starting to see. And will enrich our lives with entertaining and engaging experiences.

But what of the downsides? Will people fall in love with virtual girlfriends instead of finding someone real? Will the personnel shortage flip the other way leaving many without a job?

Who knows. But as Arthur C. Clarke once said, the only thing we can be sure of about the future, is that it will be absolutely fantastic.

Alex Smale

About The Author:

Alex Smale is a digital business and technology expert. He is a virtual reality software developer, having developed an award-winning VR application to help people living with dementia.

Are you a leisure or visitor attraction owner? Are you busy on the peak days. But wish you could get more visitors on the quiet days? Then you might want to read this article.

Because this is how leisure attractions can get more control of their visitor numbers.

You see most visitor attractions don’t promote themselves as effectively as they could do.

Most rely on repeat business, people searching on Google, or word of mouth to get the visitors to come in.

What we end up with, is a mad situation where parents and couples are struggling for ideas on what to do. Even though they’re surrounded by great attractions all around them.

And that’s because the visitor attractions out there aren’t marketing themselves in modern, targeted and consistent ways.

Meaning their visitor numbers are up and down. They don’t make anything when the weather is bad. And they’re too busy when the weather is good.

They can’t control the flow of visitors as they need to, and they aren’t making as much from their venue as the should be.

What’s more, those tactics only get you a small portion of the people out there actually looking for something to do like your attraction.

When there are actually many more people you could inspire to come and visit if you put yourself in front of them.

My name is Alex Smale and I’ve been a zoo manager and a digital marketer for many years. I know what it feels like to run and grow a successful visitor attraction.

As well as how to help visitor attractions to market themselves the right way.

I’ve operated at the highest levels of marketing in the leisure world, having been the chairman for the national zoo organisation marketing committee. And I’ve helped many visitor attractions to get control of their visitor numbers, increase their secondary spend, and improve their online reviews.

These days I help visitor attractions to develop cost effective marketing strategies that really work in the 2020’s. How to increase the revenue from the visitors you get. And how to get consistent, glowing online reviews.

Now if you would like to have more control over the highs and lows of your visitor numbers, I’ve put together a free downloadable ebook and training with the top 10 ways to promote your visitor attraction in the 2020’s.

And if you’re interested, there’s also a chance to book in a free, no-strings-attached mini-audit with either myself or the team to take a look at your current marketing and promotions to see where you could improve.

Stop waiting for the sun to shine. And start going out and getting the visitors to come to your venue.

Click here to grab a free, no-strings consultation with me.

It doesn’t matter what time of year it is. Now is always the right time to start getting more visitors to your attraction.

So book your call with me right now.

Take care.

Now a lot of people say that one of the biggest ways you lose profit is by not charging enough for your service.

And for sure, there’s a lot of truth in that. Especially if your price is really low.

But what a lot of people don’t talk about is how much you lose if your price is too high.

Nobody’s really teaching you how to know if your price is too high either.

They’re just saying ‘increase your prices, increase your prices’ not really appreciating the damage that can do, and how much money it can cost you in the long run.

Now there are actually two ways to know if your price is too high.

And I’m going to teach you both right now.

So the first of the two ways to know if your price is too high is to look at two very key metrics.

Your offer percentage, and your offers close percentage.

The offer percentage is the percentage of calls that show up who are a good fit and you offer your product to. i.e. it suits what they need, and they can afford it

Now this should be between 60% and 80%. So you make an offer to between 60% of your calls that show up and 80%.

If it’s lower than 60%, then your marketing could be off, your sales team could be playing it too safe to make their close rate look better, or your program just isn’t in alignment with what most people need.

If it’s higher than 80%, then you’re probably making offers to people who aren’t a good fit.

Or you’re filtering out too many applications and you’re losing some good potential clients there.

Your offers close percentage is the number of the people you’ve made an offer to close.

So it’s different to your overall close rate. Which is the percentage of all calls that close.

Your offers close rate is much more useful, as it’s measuring your ability to close people who are a good fit and who can afford what you do.

Your offers close rate should ideally be between 25% and 40%.

Depending on the volume of calls you have, this number can vary a lot. But if you’re taking a lot of calls, then this number should be fairly steady.

Now there’s a couple of factors here. Not just cost. But obviously closing ability.

So this is assuming your closing ability is pretty good. And pretty consistent.

If someone’s a terrible closer, then their close rate is always going to be low regardless of price.

If you’ve got that problem by the way, give me a call. I can help you with that.

But assuming your closing ability is good. If your offers close rate is consistently below 25%, then your product is probably too expensive.

And if it’s consistently above 40%, that’s great! BUT, the chances are, you can probably increase your price incrementally as the likelihood is, your price is too cheap.

The second way:

Ok, so here’s how to get your pricing absolutely spot on without losing clients or losing money.

This is by far the most accurate method and is very well tried and tested.

Now my business partner Alex learned this method from his time in the visitor attraction industry.

And it’s how many visitor attractions optimize their ticket pricing.

And this process works well for anything, no matter how low-ticket or high-ticket it might be.

The process is called banding.

Now if you were to go up to someone on the street and ask someone how much they would pay for something, most people would low-ball it.

Because they don’t want to get tricked into paying more.

So straight up asking people what the price should be doesn’t work.

However, asking people who’ve already bought the product and used it what the highest price they would pay for it, and the lowest price they think it’s worth, gives you a much more useful set of numbers.

Especially when you ask a lot of people.

So what you need to do, is to ask as many of your clients as possible, what the highest price they would pay for your product would have been. And the lowest they think it’s worth.

And you want to map on a graph those two numbers for everyone.

What you end up with are what we call two clusters of data.

The upper cluster and the lower cluster.

And if you draw a line in the average middle between those two clusters of data, you will get a very accurate number for what your price should be.

Now, bear in mind, it’s not going to be a nice round number. It’s going to be something like $5381 dollars or something.

Which might not work well for you with your marketing and sales.

So by all means round it up a little bit to a prettier number.

But the closer your price is to that number, the less profits you’ll be losing due to pricing.

I hope you found that useful. Check back soon for more useful content.

Alex Smale