Cost per Impression

What is Cost per Impression?

Also known as CPM, Click per Mille (Latin for “thousand”), the Cost per Impression (CPI) analyzes the costs for a company to have its ad shown, regardless of the clicks it receives.

This marketing metric is used by companies to measure how much they are spending on ads. Due to the high demand for certain keywords when buying online ad space, many platforms currently use a bidding process, in which organizations establish the maximum cost they are willing to pay to have their ad shown in certain conditions (such as time, placement, duration, etc.).

CPI is a highly relevant metric for your marketing team to follow.

Why is Cost per Impression important for marketing teams?

Cost per Impression is important especially in “traditional” forms of marketing such as radio, TV, and billboards. Its major drawback, however, is that it can’t distinguish between passive impressions (views) and active leads (purchases).

With this caveat in mind, CPI can nonetheless provide a “baseline” view of your company’s advertising reach. When considered alongside metrics based on internet engagement such as Cost per Lead, Cost per Impression allows for a more complete understanding of your company’s marketing effectiveness.

How to calculate Cost per Impression

To obtain an easier result to work with, companies usually calculate the Cost per Impression for every thousand impressions. If the calculation is made per single impression, the KPI will be called the Cost per Impression (CPI).

Cost per Impression = (Cost of ad campaign / Number of Impressions) x 1000

CPI vs. CPC - what’s best?

When it comes to advertising on social media platforms, there’s another KPI that’s often compared to Cost per Impression–Cost per Click (CPC). How do you distinguish between these two metrics, and what are the best practices for use with CPI?

First, remember CPI’s other name–Clicks per Mille, or “thousand.” Thus, CPI/CPM gives the cost for every thousand impressions your ad receives. CPC, meanwhile, charges you by the click regardless of how many people have seen the ad.

Second, CPI is generally cheaper and easier to manage than CPC, especially for smaller companies. What’s true for one type of business isn’t necessarily so for another, and small companies with limited resources and a fixed budget will have an easier time working with CPI.

Finally, because of its more “bespoke” nature, CPI is more focused on brand awareness rather than raw lead generation. So, if your goal is to generate buzz about your product or try to establish a presence in the market, CPI is your better bet.

In the end, Cost per Impression is a tool rather than an indication of final outcome – its intended use is to minimize future expenses related to customer acquisition.

Other, similar KPIs to Cost per Impression include:

• Number of Ad Impressions
• Ad Spend per New Deal
• Ad Spend per New Order