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Definition

Cost per impression is an internet advertising metric which defines advertising cost in terms of the number of impressions made.[1]

Purpose

Cost per impression, along with cost per click and cost per order, are used to assess the cost effectiveness of internet marketing. Each has benefits depending upon the perspective and end goal of the advertising activity. Once a certain number of web impressions are achieved, the quality and placement of the advertisement will affect clickthrough rates and the resulting cost per click.

Construction

Cost per impression: The cost to offer potential customers one opportunity to see an advertisement.

Cost per impression ($) = Advertising cost ($) ÷ Number of impressions (#)

Note that cost per impression is often expressed as cost per thousand impressions in order to make the numbers easier to manage.

Related Metrics and Concepts
Effective cost per mille (eCPM): Also known as effective cost per thousand. The Search Engine Marketing Professionals Organization (SEMPO) defines eCPM as ''a hybrid Cost-per-Click (CPC) auction calculated by multiplying the CPC times the click-through rate (CTR), and multiplying that by one thousand. (Represented by: (CPC x CTR) x 1000 = eCPM.) This monetization model is used by Google to rank site-targeted CPM ads (in the Google content network) against keyword-targeted CPC ads (Google AdWords PPC) in their hybrid auction.''[2] [3]

References
  1. ^ Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; and David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Second Edition). Upper Saddle River, New Jersey: Pearson Education, Inc. <http://www.amazon.com/Marketing-Metrics-Definitive-Measuring-Performance/dp/0137058292>
  2. ^ American Marketing Association. Dictionary: eCPM. <https://www.ama.org/resources/Pages/Dictionary.aspx?dLetter=E> [cited 16 February 2015.]
  3. ^ SEMPO. Glossary of Terms: eCPM. <http://www.sempo.org/?page=glossary#e> [cited 16 February 2015.]


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