The world of Internet marketing is rather new and therefore many of the measurements that are used to gauge Internet marketing performance and return on investment are also relatively new. One commonly used metric is cost per impression (CPM), which really means the cost per every 1,000 impressions. An impression is when an ad, created by a vendor, appears on a website. That is, one impression is when an ad is displayed for view on a page. In general, more impressions leads to more clicks.
- Determine the number of impressions for the ad. Most ad software tracks the number of times an ad is shown. While most Internet marketing affiliate networks require payment only when someone has clicked on an ad, you can still determine the cost as long as your program tracks the number of impressions. Let’s say that the program shows that your ad has made 100,000 impressions.
- Determine the total cost of all impressions. This number is rarely calculated for you. If not, use the total cost of all clicks. Let’s say that the total cost for all clicks for a certain ad campaign is $1,000.
- Divide the total number of impressions by 1,000. In our example the answer is 100 (100,000 / 1,000).
- Divide the total cost of the ad campaign (i.e., $1,000) by the answer to Step 3 (i.e., 100) for the CPM. The answer is $1,000 / 100 = $10. Therefore, the cost per impression is $10.