Although discussed in a previous blog post, the CPM (Cost per 1000 Impressions) is an instrumental part of online advertising, in the same manner as CPC. (Please see the blog post ‘Bidding Control’)
Throughout my studies however, fully grasping the concept of this method has been difficult, therefore I will attempt to outline an easier way of understanding how the CPM works.
Before the era of internet marketing, old fashioned methodologies of offline advertising, such as magazines and banners, used a similar process to CPM. Every time that a banner was shown 1000 times, you would be charged.
For the CPM model of payment, this is no different. Every time your advert is shown 1000 times, (that is, 1000 impressions) you will be charged.
Therefore, with CPM, and unlike CPC, you are NOT charged for clicks on your advertisement.
To illustrate further, and offer a reminder, CPC means that you can bid for keywords and displaying your ad is completely free, it is the clicks that you pay for.
CPM choices can only come into effect if an advert is being run on the content network rather than the search network.