What Is CPM Marketing? Your New Tool for Brand Awareness

In the frenzied world of digital advertising, brands compete for attention across social media, search engines, forums, and news sites. 

“People are spending 12 hours a day just consuming content, and you have to stand out against the funniest AI TikTok videos now,” says Sean Frank, CEO of accessories brand Ridge, on an episode of Shopify Masters. 

A solid messaging strategy—and the right paid advertising model—can help you cut through the noise. CPM marketing can be especially effective. In this format, advertisers pay based on ad impressions instead of clicks or conversions, with the goal of increasing brand awareness.

This article covers the ins and outs of CPM marketing, including how to calculate CPM and when to use CPM versus other models.

What is CPM?

CPM, or cost per thousand impressions, is a digital advertising metric that measures the cost of displaying an ad to one thousand viewers. This metric helps advertisers assess the efficiency of their campaigns. By analyzing CPM alongside ad conversion rates, marketers can optimize ad spend and target audiences more effectively to maximize return on investment.

Benefits of CPM

CPM marketing offers several advantages, making it an effective way to promote your business online. Here are some of the key benefits of running ad campaigns with the CPM pricing model.

Improved brand awareness

A CPM campaign on an ad platform like the Google Display Network can help your business increase its brand awareness, since the goal is to make your ad appear to as many members of your target audience as possible. 

Cost-effective customer acquisition

CPM advertising can be less expensive than other digital marketing bidding strategies. CPM campaigns let you cap your spend at a certain number of impressions. Once you hit that number, you can step back to analyze your ad’s effectiveness and decide whether to run it again. 

Just know that the cost of CPM ads has increased over the past decade, and you’ll need to spend more money—and create a large quantity of stellar ads—to pique viewers’ interest. “The cost of attention is going up,” explains Sean. 

Effective retargeting

Although CPM ads may not directly drive conversions, they lay the groundwork for effective retargeting. If viewers see your CPM ads and visit your ecommerce website, for example, you can track those visitors and serve them targeted ads in the future. Installing the Meta pixel on your Shopify site is an easy way to retarget site visitors with Facebook and Instagram ads.

Plus, your CPM ads cultivate familiarity with your brand, so potential customers are more likely to convert when they see your messaging in other marketing campaigns. Those campaigns can span marketing channels, including email, organic social media, or search ads. 

How to calculate CPM

The formula to calculate CPM is straightforward:

CPM = (Total cost of the campaign / Total number of impressions) x 1,000

To use the CPM formula, you need two pieces of information:

• The total cost of your advertising campaign, or the amount you pay to run the ads
• The total number of impressions your campaign will generate (or has generated)

Once you have these numbers, divide the total cost by the total number of impressions to get the cost per impression. Because CPM is the cost per thousand impressions, you multiply the result by 1,000 to get your CPM.

CPM calculation example

Let’s say a clothing retailer runs an online advertising campaign with the following details:

• Total cost of the campaign: $5,000
• Total number of impressions: 2,000,000

Here’s how they could calculate their CPM:

CPM = ($5,000 / 2,000,000) x 1,000

CPM = $2.50

So, the CPM for the clothing retailer’s advertising campaign is $2.50. This means that for every thousand impressions its ads receive, it pays $2.50.

When to use CPM marketing 

CPM marketing works best when you want to increase brand awareness, whether you’re launching a new business or targeting a new audience. 

Know that effective CPM marketing, like other types of advertising, requires creating a large number of ads. “The future of advertising is just shots on goal,” says Sean. “What you see and what you like is going to be totally different from what I see and what I like.”

If you plan to run CPM ads on social media, you must be wary of ad fatigue. “On social media in general, ads wear out really fast,” says growth strategy expert Jaclyn VanSloten, who runs the marketing firm Femra Consulting. “Make sure you have the funds to refresh creative on a fairly regular basis if you start seeing performance dropping.” 

Writing a marketing plan can help you assemble a cohesive set of cross-platform marketing strategies. A free marketing plan template like the one from Shopify can guide you. You can also use marketing automation tools available from Shopify to create seamless marketing flows.

CPM vs. CPC vs. CPA: What’s the difference?

Advertisers can choose from several ad pricing models when running ads on platforms like Google or Meta Ads. The three most common models are CPM, cost per click (CPC), and cost per action (CPA).

The best pricing model for you will depend on your campaign’s goals, which in turn will dictate your ad formats and ad creative. A healthy paid marketing strategy will include a mix of marketing types. 

Here’s what each pricing model means, when you should use each, and how each model should inform your creative:

CPM (cost per mille)

CPM is the cost an advertiser pays for one thousand impressions of an advertisement. Ad platforms register an impression each time they display an ad to a user, regardless of whether the user clicks on the ad or converts. This focus on views over conversions makes CPM ads a good fit for brand awareness campaigns.

Your CPM ads should get people at the top of the marketing funnel excited about your brand. “If I have an awareness campaign, I’m usually casting a broader audience net, maybe people who aren’t familiar with the brand,” says Jaclyn. Your ad creative should inspire them to learn more about your company.

“Awareness is going to be brand storytelling. It’s fun, feel-good, emotional, creative, and a little bit longer,” Jaclyn adds. “It’s a little bit more emotional, whereas conversion will be a bit more polished.” Jaclyn explains that you’ll want these ads to be full-screen and immersive. On Instagram, for example, that means creating Reels and Stories ads. 

You can use click-through rate (CTR) to measure the effectiveness of your CPM campaigns. Even though you pay for views, not clicks, a higher CTR indicates that your ads are engaging.

CPC (cost per click)

CPC, or cost per click, is a pricing model where advertisers pay each time someone clicks on their ad, regardless of what happens next. This model typically focuses on driving traffic to an online store or landing page. CPC is the metric used to measure pay-per-click (PPC) campaigns.

“CPCs are lower-funnel metrics,” explains Jaclyn. Use CPC ads to reach customers who already know about your brand and are in the process of deciding to purchase. You can use a CPC campaign to drive traffic to a specific product page or product collection page (e.g., for a seasonal sale). 

You can also use CPC ads to generate qualified leads, since you’ve already verified consumers interested enough in your brand to click on your ad. Once they do, you can capture their information with a pop-up form or through site activity trackers like the Meta pixel.

Here’s how to calculate CPC:

CPC = Total cost of the campaign / Total number of clicks

CPA (cost per action)

CPA, or cost per action, is a model where the advertiser pays only when a viewer takes a specific action after clicking the ad. This action could be making a purchase, signing up for a newsletter, downloading an ebook, or any other predefined conversion event designed to generate leads or drive sales.

CPA is a performance-based model commonly used in affiliate marketing, where content creators and publishers earn a commission every time someone buys something through an affiliate link they share. Advertisers choose CPA to ensure their ad spend maps to specific conversion goals.

“It’s the only marketing model that guarantees that a business only pays when it achieves real results, such as product sales,” says Jerrid Grimm, head of publisher marketing at partnership management platform Impact.com. 

It can also help businesses measure the effectiveness of individual ads. “Since the CPA model tracks right down to an individual sale, businesses can see exactly how their various marketing efforts are contributing to each customer’s purchase,” says Jerrid.

With CPA marketing, you target users in the lower part of the marketing funnel. “I’m going to have a narrower audience, and I’m going to be using tactics like retargeting to make sure to re-engage audiences,” says Jaclyn.

Creative should be pointed. “Conversion formats are going to be what the product is, your offer, and what the benefit is—those harder-hitting messages,” Jaclyn explains.

Here’s how to calculate CPA:

CPA = Total cost of the campaign / Total number of conversions