Cost per Mille

Since print, advertising has been priced by how many people it gets placed in front of. Circulation was the basis for the rate, and how many of those readers actually looked at the ad was something nobody could count.

Moving online didn't change the unit. What became countable was the number of times an ad appeared, and appearing isn't the same as being seen. An ad loaded low on a page that the reader never scrolled to still counts as one impression. So two placements bought at the same rate can differ enormously in how much attention they actually received — which is usually why the cheap placement was cheap.

Divide the spend by the impressions, then multiply by a thousand. Four things to settle or watch.

1. Check the definition of an impression. An impression is one appearance on screen, and the conditions differ by platform: one counts it only if half the ad was visible for at least a second, another counts it as soon as the file loads, and both use the same word.
2. Divide. Spend $350 for 100,000 impressions and the rate is $3.50. Run it backwards and $700 at a $3.50 rate buys 200,000 impressions.
3. Read it beside reach. Reach, the number of people who saw the ad, and frequency, how many times the average person saw it, belong next to it. A hundred thousand impressions can be 20,000 people five times each or 90,000 people once.
4. Convert it forward. Multiply by click-through rate (CTR), the share of impressions that get clicked, and you have a cost per click. At a $3.50 rate with a 0.5 percent CTR, a thousand impressions produce five clicks, so each one costs $0.70. With that conversion done, impression-priced and click-priced placements can be compared in one table instead of being argued about separately.

"This placement is $7 and the CTR is 0.2 percent. That's $3.50 a click."

Converting an impression rate into a click rate in order to judge it expensive.

"A hundred thousand impressions and reach of 18,000."

The same people are seeing it repeatedly, which caps how much the placement can do.

"Awareness is the goal here, so we'll buy on impressions."

The purchase is the exposure itself rather than an action.

Pagedeck bought banner placements on impressions during an industry event. Ravi compared it against click-priced inventory at the same budget, and click prices had doubled for the duration of the event. Buying impressions and converting to a click cost came out cheaper for those two weeks. Afterwards the buying went back to clicks.