Cost per thousand (CPT) is also known as cost per mille (CPM). The word “mille” is the Latin translation for “thousands”.
CPT used to identify the cost of every 1,000 impressions on a particular ad. For example, if a website charges advertisers with $1 CPM or CPT, that means an advertiser would have to shell out $1 for every 1,000 views or impressions. 10,000 views would cost $10, and so on.
CPT helps advertisers compare how cost-effective their different marketing channels are. Here is how CPT is computed:
CPT = (Cost of running the ad / Audience size of the media platform) x 1000
If advertisers want to learn about how efficient a particular platform is for running their ads, they can ask for the CPT computation. This will enable them to estimate how much they should prepare before running their ads, and it will help them strategize on which media channels to use.
What is Cost Per Thousand?
CPT is the most common way that websites and platform managers price their digital marketing services. This wholly relies on the number of impressions the media channel gets. Advertisers would then pay a fixed fee for every thousand impressions that their ad receives on a particular website or digital channel.
However, it is important to note that impressions are not equivalent to click-throughs or engagements. An ad could have been seen thousands of times but only received less than a hundred clicks. This may be counterproductive to what the ad is trying to achieve, so CPM strategies require constant monitoring.
To get a better grasp of the performance of your campaign, it is recommended that you analyze its click through rate (CTR). While this is not the only factor that determines the success of a pay-per-click (PPC) campaign, it is one of the most important. This metric measures the amount of clicks your ad received during the campaign. A high click through rate can signal:
- How compelling your overall ad is
- How engaging your it is
- How interested consumers are in what you offer
What Are Other Pricing Models When It Comes to Digital Ads?
Aside from CPT, there are two other methods that most digital platforms use to price ads on their sites: cost per click (CPC) and cost per acquisition (CPA).
CPC
The cost per click pricing model relies on the amount of clicks an ad receives during the ad campaign. It differs from the CPT model in such that it focuses on the engagement that the ad received rather than its impressions.
CPA
The cost per acquisition pricing method focuses on the amount of times a visitor made a purchase after clicking on an ad. This is perhaps the most cost-effective method because it guarantees that an advertiser would only have to pay for their ad once they were able to secure a sale.
Most of the time, website owners prefer to use the CPM model because they get paid based on impressions. They would only need to drive traffic towards their site. However, to really earn, a website must experience a high volume of online traffic. Additionally, it would be good to note that social media platforms often charge higher than other websites online.
How Can CPT Best Benefit Your Business?
Using CPT is most effective when your campaign goal is to increase brand awareness and brand recall. This method is best for bigger, more established businesses because of how targeted it is. However, it might not be the ideal if you require numbers to showcase the success of your campaign. To develop a powerful CPT strategy, ensure that:
- You have a clear understanding of your business’s overall goals
- You have clearly outlined goals for your campaign
- Identify your leads
- You have a strategy to follow up on your generated awareness
These steps would help solidify your marketing campaign and guarantee that you’d get return on investment. It is important that you also research the best media channels to run your ad campaigns on to ensure optimal results.
