Comparing Cost-per-Mille (CPM) vs. Cost-per-View (CPV): Which Is Best?
Are you wondering if CPM or CPV is the appropriate pricing model for your video advertising campaign?
If you’re looking to run a video ad campaign, there are a lot of different factors that come into play.
One of those factors is which pricing model will work best for your needs. We’ll go over what each one means and how they differ from each other so that you can make the most informed decision possible.
There are two main types of pricing models that we cover today. Cost-per-mille (CPM) and cost-per-view (CPV). Understanding the difference between CPV and CPM is essential for evaluating which model aligns with your campaign goals. Each has its benefits, but it’s important to understand how they work before deciding which one is right for your business.
If you plan to run a video campaign and need to run on either pricing model, our team can help.
Whether you go for cost-per-mille (CPM), cost-per-view (CPV), or mix them with the many other models such as CPC cost per click, CPE or cost per engagement or even CPCV cost per completed view, they all have their pros and cons.
Pricing models have changed significantly in the past few years. For example, Facebook ads were traditionally priced on CPM/CPC, but you can now run on a CPV bidding model.
Online advertising is shifting towards cost per engagement (CPE) or cost per action (CPA). So, rather than paying to show your ad 1,000 times, you only pay when your ad is clicked or engaged with, e.g., cost-per-click (CPC) or cost-per-engagement (CPE).
What is CPM advertising?
CPM ads are priced at a dynamic or flat rate for every thousand impressions. An impression refers to every ad shown on a user’s screen, whether above or below the fold, whether seen or not, whether engaged or not.
It is the most widely adopted pricing model in programmatic advertising.
The reason it’s important is that when you understand this pricing model, you understand that the higher the revenue per thousand impressions, the more money the publisher who is displaying the ad will make.
For publishers, they use the acronym revenue per mill or RPM because, for publishers who are sell-side, it’s revenue, whereas on the other side, the buy-side, for advertisers, it’s a cost hence the RPM and CPM, respectively.
The main drawback of this pricing model is the lack of flexibility, no matter the quality of the ad impression the advertiser pays.
The vast majority of programmatic advertising uses CPM bidding and pricing to value impressions, and the real-time bidding ecosystem, which is prevalent in programmatic, uses this pricing model.
For reach and awareness campaign’s on LinkedIn, Facebook Ads Manager and Pinterest, you will be charged a CPM model.
This model draws advertisers due to its simplicity. They know precisely how much their campaign will cost them and for what length of time they need to pay, e.g., if 1,000 people see your ad, you’ll be charged a set amount per thousand impressions, which means no extra money if someone engages with it.
How does cost-per-mille work?
Every time you load a web page, ad servers will check if an advertisement is available for that page.
The advertiser with the highest bid wins, and their advertisement is served into this space. A pricing model whereby the advertiser is charged $0.01 more than the second-highest bid for the ad impression.
What is cost-per-view advertising?
Cost-per-view (CPV) is a performance-based advertising pricing model, this time based on every ad that is successfully displayed and watched, meaning you pay for each view instead of a flat rate such as CPM’s cost per thousand.
Firstly, it’s essential to distinguish between cost-per-view (CPV) and cost-per-completed-view (CPCV), as much of the talk around the two now overlaps.
CPV started as being charged for a simple view, perhaps 3 seconds or more, but the CPCV model takes this even further, charging only when a user has viewed a whole video or until an agreed-upon point, typically 15, 30 or 60 seconds in rare circumstances.
CPM Vs. CPV: Which model is best for my ad campaigns?
There is no right or wrong and one-size-fits-all style as with all online advertising models. Each ad campaign will have different criteria from budget to goals.
It would be best if you tried to think ahead and work out what the average cost of the KPI you are looking for is going to be.
So if your KPI is 15-second views, how many video impressions will you need to deliver that view threshold of 15 seconds? If you used CPM pricing, what is the total cost divided by the number of 15s views? Is this more or less than the CPV model?
Why choose CPM?
Compared with CPV, pricing is predictable if you are paying a flat CPM. If you are buying on a dynamic CPM there is greater risk.
The main advantage is you could acheive more views than CPV pricing but it’s a risk and you will have to optimise
Why choose CPV?
The most significant benefits of CPV over CPM are the guaranteed view lengths and increased audience impact it can offer.
Still not sure?
Ultimately, there are three factors you need to consider when creating your ad campaign, and these will guide your choices:
FAQS
Is CPV going to limit the scale of my ad campaign?
What are your objectives, and does the chosen pricing method help you scale them up? If you’re looking for increased brand awareness, a CPV model alone won’t be the best approach. Usually, a combination of both methods can deliver a good balance.
CPM vs CPV, which is more efficient?
A CPM buy that delivers a cost per view of $0.03 is likely to be more effective than a CPV campaign that delivers a cost per view of $0.06, which is why testing is so important. If you want to learn more about how we plan and test different channels and buying formats, reach out to our team.
What is the average cost per view, CPV?
The average CPV will vary and depend on your target audience and the advertising channel you are using to reach them. A specific audience will normally mean a higher average cost per view.
If you buy Facebook ads, the average CPM tends to be higher than YouTube. TrueView ads, for example, where CPV can be as low as $0.01, making it very efficient.
A good rule of thumb is to estimate the average between $0.03 and $0.20+ per view as a starting point.
Advant Technology offers advertisers CPVs as low as $0.01 across programmatic advertising.
Can you use CPV pricing for display advertising?
NO. CPV does not work for display banners.
What is a good programmatic CPM?
Programmatic CPMs vary by market, audience, website, ad network, ad exchange and publisher.
$1-$15.00 CPM is a good starting point for programmatic CPMs, but you can find them as low as $0.10 per thousand impressions.
You can also find the cost per click (CPC) or cost per action (CPA). To estimate the average CPC, you need to have some idea of your conversion rates and the value of each conversion. The cheapest CPMs usually are on sites with large traffic/scale.
How do you calculate CPM?
CPM = 1000 * cost / impressions or try this handy calculator.
How do you calculate CPV?
CPV = Cost / views or try this calculator.
How do I lower my CPV?
If you are using Facebook, try improving your quality score. You can improve your Facebook ad quality score by having a clear call to action and avoiding ad fatigue by rotating your ads frequently.
What is a good ad spend budget for a CPV campaign?
That depends on the size of the target market you are trying to reach and the frequency you want to achieve.
Final thoughts
The choice between CPV and CPM depends on the type of campaign you want to run and the audience that you’re trying to reach.
If your target is a niche, CPM will likely be more effective as it is more scalable. If, however, you’re looking for mass-appeal advertising campaigns, then CPV could work a treat.
CPM and CPV are just two pricing models, and they can branch off into more specific online advertising pricing models. Further reading is available on our blog, where you can find information on other pricing models.
If you are interested in increasing brand awareness and driving sales reach out now and we can put an action plan in place.
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