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Confused About CPM

by jitsking
6 replies
Hopefully someone can enlighten me on something that I'm confused about it. So when it comes to CPM, from an advertisers point-of-view, they pay for every 1,000 impressions of their ad. Now their ad is viewed on multiple sites. So let's say it's viewed 100 times on Site A, 200 times on site B, 300 times on site C, and 400 times on site D. Once that happens, the advertiser pays. Correct me if I'm wrong, but that is how that works?

From the perspective of a publisher is where I'm more confused. So if I'm displaying CPM ads on my site, am I paid everytime the ad is viewed on my site or does the ad have to be displayed 1,000 times on my site before I get paid?

Let's say an advertiser pays $2.50 per CPM. How much of that $2.50 is paid out to the publishers?
#confused #cpm
  • Profile picture of the author Dharmi
    You seem to be very confused, that's simple, if you are a publisher and you display CPM ads on your website than the advertiser will pay you for 1,000 impressions from "only" your website and not combining the impressions from other websites.

    I hope this helps you in clarifying your confusion.
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    • Profile picture of the author desireedavid
      With CPM, every time someone opens your page and the ad is shown, that counts even without the visitor clicking on the ad, right? Thanks!
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      • Profile picture of the author Dharmi
        Yes.. Opening the page counts as impression, even if not clicked
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    • Profile picture of the author jitsking
      I understand that the advertiser pays for every 1000 impressions. But from a publisher perspective, is the publisher paid after 1000 impressions have been made or is the publisher paid as the impressions keep coming in? So, for example, as a publisher, would I get paid for 500 impressions?
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      • Profile picture of the author dburk
        Originally Posted by jitsking View Post

        I understand that the advertiser pays for every 1000 impressions. But from a publisher perspective, is the publisher paid after 1000 impressions have been made or is the publisher paid as the impressions keep coming in?
        No, the advertiser typically does not pay for every 1000 impressions. CPM is a pricing model. The price is peg to 1000 impressions, it does not mean that advertisers have to purchase in blocks of 1000, nor that publishers will be paid for whole blocks of 1000. It just sets the rate.

        CPM is a pricing model, not payment terms.

        Let me use an analogy that might help you to understand.

        If you drive a car you likely purchase gas for your car at a gas station, right?

        Gas stations typically price gasoline on a per gallon basis (or per liter), right?

        They don't require you to purchase in whole gallons, they just use per gallon pricing. You can sell, or purchase partial gallons yet it is always priced on a per gallon pricing model. That's the same way CPM pricing works. Does that make sense?

        Now if you are purchasing large amounts of gas, you might negotiate rates based on thousands of gallons, and for convenience sake your supplier might require you to order gas in blocks of 1000s of gallons. Those are terms that are unique to the supplier, and you have to check with that supplier to see if they have any specific order quantity requirements.

        CPM pricing for advertising is analogous to cost per gallon pricing for gasoline. Everyone understands and can compare pricing between suppliers by using a standard pricing model. Minimum order quantities are defined by the seller and it could vary, so check with the supplier for any specific order quantity requirements.

        Originally Posted by jitsking View Post

        So, for example, as a publisher, would I get paid for 500 impressions?
        Usually, you earn money for every single impression, and CPM pricing model is used to determine how much you have earned. However, pricing terms are not the same as payment distribution terms. The entity selling the ad space usually defines the terms for how you are paid. Most ad platforms have a minimum threshold for payment distribution that is based on a minimum dollar amount, not based on impressions. Check with your ad platform to learn their exact payment distribution terms.
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  • Profile picture of the author dburk
    Hi jitsking,

    CPM is a pricing model for advertising. CPM is short for Cost Per Mille (in Latin mille means thousand). CPM is the model used by the traditional advertising industry for radio, TV, magazines etc. and it allows the advertiser to know, and compare the price being paid for 1000 ad impressions, regardless of the media where the ad is placed.

    The earliest commercial advertising model for the World Wide Web was banner ads that were priced based on the CPM model (Cost Per 1000 impressions). Later the CPC (Cost Per Click) pricing model was introduced and quickly became the preferred pricing model for most ad platforms, especially among Search Engines. CPM is still widely used for banner ads and display ads on the web.

    The precise terms for payment of CPM priced ads are set by the individual ad platform that is selling the ad space and vary somewhat among the networks. In some cases you purchase blocks of 1000 impressions in advance and they are delivered after you place the order. In other cases you are purchasing all available impressions for an ad slot and paying at a rate that is priced based on the CPM model. Check with the individual ad platform provider to get precise payment terms for their CPM pricing model.

    As a publisher that is selling ad space via an ad network, you need to check with the ad platform that is selling your ads to discover their specific terms for payment. You will usually find that information published on their website.

    If your are publisher selling ad space directly to advertisers then you get to define the terms of payment any way you like, as long as you can get the advertiser to go along with those terms.
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    * Get Results - Outsource Your PPC Management |
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