Cost Per 1000 Impressions

cost versus earnings

[dvduval]

Maybe I'm just bored, but I beg to differ with the use of the word "cost" here when used in the Adsense Publisher reports. The ads don't "cost" me anything (except use of space). Rather, the ads "earn" money. Why don't they call it Earnings Per 1000 impressions?

[europeforvisitors]

Because "CPM" (cost per thousand) is the term used in the advertising and publishing industries.

[dvduval]

And what would be an example in these industries where earnings are referred to as costs? Or even an example where earnings are reported to the publisher (not the advertiser)?

[rubenski]

Agreed. I've been wondering about the same questions, but never bothered to post it really. EPC makes more sense. A lot of people here use EPC, so you're not alone!

[europeforvisitors]

You can call it CPM, EPM, RPM, or anything else you like. Google has chosen to use CPM, which is shorthand for "effective CPM" when used in connection with pay-per-click (a.k.a. cost-per-click) advertising.

[dvduval]

I definitely know what they mean, and I'm sure everybody else does too...just pointing out that I am earning something, rather than it "costing".

[nuevojefe]

It's costing Google $$$$$ per thousand impressions.

[cagey1]

Perhaps Google should change the term to "Cash Per Thousand"

[ronin]

dvduval> Yes, you may be earning something, but you're looking down the wrong end of the telescope.

The advertising industry exists doesn't exist because there are publishers but because there are advertisers.

Advertisers talk to publishers and ask them: "If I were to put an advert in your magazine over the next three months, how much would that cost me per thousand?"

And the publisher gives the Advertiser a cost per thousand (CPM).

With AdSense, your CPM is how much you are charging your advertising customer - Google - to put adverts on your page.

[kyrkesmith]

I don't get how they get M to stand for Thousand. Shouldn't it be k, M kinda implies Million.

[UDaMan]

I think the M is from roman numerals M = 1000, C = 100

[dvduval]

Yes Ronin, but I am not charging Google a fixed cost. Rather, Google is choosing how much the ads will cost. So in a sense, all Google is saying is here is the Cost we are setting for ourselves for your ads. Even in the definition they say it "... is calculated by dividing total earnings by the number of impressions in thousand."

[ChrisKud5]

CPM was not born with "cost per click" advertising.

CPM (if i remember correctly) was used when talking about the COST of 1000 runs of a ad in a magazine or newspaper. The cost could be something like $100 for 1000 impressions (magazine ads and other print media do not charge by click :) and the CPM is multiplied by the number of 1000 impression units. If it was run 10,000 times, that would be $100 x 10.

Google should use something like "CASH MONEY" or "CHANCES TO PAY TAXES"

[ronin]

kyrkesmith> CPM is "cost per mille" (= "cost per thousand"). It is a Latin M, as UDaMan says. In the same way that millenium is a thousand years or a millimetre is a thousandth of a metre.

dvduval> No, okay, you're absolutely right, we're not charging Google a fixed fee, but that's because Google isn't charging Adwords Advertisers a fixed fee. The adverts cost as much as the advertisers are willing to bid for them.

If all Adwords Advertisers paid Google 18 cents per click and Google paid us 12 cents per click to display its adpanels, we would be charging Google:

12 cents x no. of clicks per thousand impressions