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Avg CPM

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Hi Guys,

 

I don't understand how on the dashboard the "avg CPM" is so far off what is real. with competitors doing searches all the time it must have a effect on this number so how can it be of use to me?

 

Also why is it expressed in pounds? 

 

I clean carpets so its safe to say that prospects will visit around the time they are looking so maybe the use of Ip would make this number more real? just a thought.

 

Respects

 

Ian Harper

2 Expert replyverified_user

Re: Avg CPM

Top Contributor
# 2
Top Contributor

Hello, Ian.

 

With regards to costs, there are several metrics available in the Adwords interface.

 

There is the well-known CPC (cost per click) and there is also CPM (cost per thousands impressions). Some people want to know what they pay per click, others want to know what they pay per impression.

 

The relationship between the two is the following:

 

avg CPM = (clicks x avg CPC) / 1000, or total costs for a certain period divided by the number of times an ad was shown.

 

or

 

avg CPM = (impressions x CTR x avg CPC) / 1000 because clicks = impressions x CTR.

 

I think that maybe you have mistaken it for cost per click, am I right?

Calin Sandici, AdWords Top Contributor | Find me on: Google+ | Twitter | LinkedIn | myBlog
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Re: Avg CPM

Top Contributor
# 3
Top Contributor
To make things a bit clearer, here's an example.

Let's say your ad shows 1000 times, gets 50 clicks, and the total cost for these clicks is 20 pounds.

The average cost per click, avg CPC = 20 pounds / 50 clicks = 40 pence.

The average CPM is 20 pounds / 1000 impressions = 20 pounds.

So, in this case, avg CPC = 40 pence, avg CPM = 20 pounds.
Calin Sandici, AdWords Top Contributor | Find me on: Google+ | Twitter | LinkedIn | myBlog
Was my response helpful? If yes, please mark it as the ‘Best Answer.’ Learn how here.

Re: Avg CPM

Visitor ✭ ✭ ✭
# 4
Visitor ✭ ✭ ✭

adwords.png

Its the £231.11 number

Marked as Best Answer.
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Accepted by topic author Ian H
September 2015

Re: Avg CPM

Collaborator ✭ ✭ ✭
# 5
Collaborator ✭ ✭ ✭
The cpm formula uses not /1000 but x1000. The formula is very simple : in english if the "cost" was 4.16 for 18 "impressions" what will the "cost" be for 1000 impressions , so the formula is [ (cost x 1000)/ imp ] = [ (4.16 x 1000) / 18 ] = 231.11 .

Re: Avg CPM

Collaborator ✭ ✭ ✭
# 6
Collaborator ✭ ✭ ✭
Or if you want to link it with CPC : CPM = CTR x (avg CPC) x 1000
Marked as Best Answer.
Solution
Accepted by topic author Ian H
September 2015

Re: Avg CPM

Collaborator ✭ ✭ ✭
# 7
Collaborator ✭ ✭ ✭
The way to interpret this is : CPM is cheaper than CPC ( having a CPM/CPC ratio of less than 1) only when CTR is less than 0.1 % ( the same with 1/1000 ) . In practice this can happen usually when you are not using frequency capping in the Display Network and you have more than 1000 impressions before a click, that is when paying for CPM becomes cheaper than CPC.

Re: Avg CPM

Visitor ✭ ✭ ✭
# 8
Visitor ✭ ✭ ✭
thanks Adrian

Re: Avg CPM

Visitor ✭ ✭ ✭
# 9
Visitor ✭ ✭ ✭
how 20pounds / 1000 impression = 20 pounds ?

Re: Avg CPM

Community Manager
# 10
Community Manager
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