What is cost per impression? Cost per impression (CPI) is the expense an organization incurs every time its ad is displayed to a potential customer. Measuring cost per impression helps marketers decide if a given ad campaign is reaching a large enough audience to justify the expense.
When you’re investing money in an ad campaign to market your business, you need to know whether or not your investment will pay off. This is why advertisers measure the cost of displaying an ad to a potential buyer, the cost of getting a potential buyer to reach out as a new lead, and the cost of getting a lead to buy.
The cost of displaying an ad to a potential buyer is the cost per impression.
Because impressions can easily number in the tens or hundreds of thousands, CPI is often converted to CPM (cost per mille, which is Latin for thousand), meaning cost per thousand impressions.
The uses of cost per impression
1. Traditional marketing
Cost per impression is most useful in traditional marketing methods like television, radio, magazines, and billboards.
In the days before the internet and Big Data, companies could not track leads by “click” to know exactly how much each lead would cost. Instead, they had to track “impressions.”
Consider television advertising, for example. Advertisers can estimate how many people were watching when a commercial for a laundry detergent was displayed. But they can’t calculate how many of those viewers purchased that detergent because of that ad.
Today, organizations can calculate the cost per lead based on click-through rates. Cost per lead is a more valuable metric than cost per impression because it tracks how many viewers take action on a given ad campaign.
However, many organizations still use traditional marketing methods that can’t track the cost per lead. So they still use the cost per impression.
2. Comparing online ad campaigns to traditional marketing campaigns
Many companies also calculate the cost per impression of their online ads in order to make direct comparisons between their online and offline ad campaigns.
3. Boosting brand awareness
When the goal of your ad is to make more people aware of your brand, as opposed to specifically generating new leads, it makes sense to use cost per impression instead of focusing on cost per lead.
How to calculate the cost per impression
You can calculate the cost per impression on any ad campaign by dividing the total advertising cost of the campaign by the number of times the campaign was displayed to potential customers.
For example, if you paid $50 on a social media ad campaign that results in 4,000 views, your cost per impression is $0.0125 ($50 divided by 4,000).
To calculate the cost per mille, you would multiply the CPI by 1,000. So in this example, the CPM would be $12.50 ($0.0125 times 1,000).
Ways to improve your cost per impression performance
- Market to a broad audience. The more views you get, the less each impression costs.
- Use compelling images and ad copy to convert more of your impressions to leads.
- Make your message appeal to a wide audience. Narrowing your message to a specific niche may be good for your cost per lead, but it will only increase your cost per impression.
- Use SEO in your content marketing to earn free impressions in search engine results.
Examples of cost per impression:
- Boosting Facebook posts: Facebook allows businesses to boost posts so the posts can be seen by a larger audience. Facebook will calculate the cost per impression and cost per click for you.
- LinkedIn CPM bidding: LinkedIn allows organizations to bid on ads by CPM as part of its “Maximum Delivery” bidding strategy. LinkedIn will calculate the cost per impression and cost per click for you.
- Billboard advertising: City planners will have data regarding the number of drivers who will pass a specific billboard location. This is the number of impressions the billboard will get in a given month. Divide the cost of the monthly billboard rent by the impressions to get your cost per impression.