CPM for Influencer Marketing: How to Calculate It and What Is a Good Average?
When you launch an influencer marketing campaign, it’s essential that you regularly monitor a series of key metrics to ensure that your campaign is hitting your objectives and generating a good return on your investment. One of these key metrics is Cost Per Mille, also known as CPM for influencer marketing.
In today’s article, we will break down the concept of Cost Per Mille (CPM) in influencer marketing and explain how you calculate this important KPI. We will also share valuable insights to help you determine the optimal CPM for your influencer marketing campaigns. That way, you will understand what average you should be aiming for when you collaborate with an influencer.
What Does Cost Per Mille (CPM) Mean?
Cost Per Mille (CPM), derived from the Latin word for one thousand (mille), is a metric used in the advertising and marketing industry to measure the cost of reaching 1,000 impressions, regardless of whether users interact with your content or not.
CPM is commonly used in the pricing models of online advertising platforms, including display ads, banner ads, and video ads. It helps advertisers understand the relative cost of reaching a certain audience size so that they can compare it to other advertising options. CPM is also a common metric for quantifying the influencer marketing investment you need to make to ensure your campaigns are worthwhile.
Your CPM for influencer marketing can vary depending on a number of factors, including:
- The size of the influencer's following
- The reach of the influencer's content
- The industry the influencer is in
- The type of content the influencer creates
- The duration of the campaign
- The exclusivity of the partnership
However, it's important to note that CPM is just one of several KPIs advertisers consider when evaluating the effectiveness and efficiency of their advertising campaigns. Other metrics such as click-through rate (CTR), earned media value, conversion rate, return on ad spend (ROAS), and cost per click (CPC) provide additional insights into how well an ad campaign is performing.
How to Calculate CPM for Influencer Marketing
To calculate your influencer marketing CPM, you simply need to gather the right data, then use a simple formula to determine your Cost Per Mille for a campaign.
Let’s break this down.
The first thing you need to do is collect all the data you will need for your formula.
- Total cost: Determine how much you paid an influencer for their services. This includes any fees, products, or other forms of compensation.
- Total impressions: Obtain the number of impressions the influencer's content generated. Impressions refer to the number of times the content was displayed to users.
The best way to collect this data is by using analytical tools provided by social media platforms. For example, if you or your influencer have an Instagram Creators or Business account, you have access to the platform’s free native analytics tool, Instagram Insights. This tool can help you accurately track and measure the total impressions generated by your influencer's content.
Once you’ve got that information to hand, you’re ready to calculate your CPM.
The formula for calculating your influencer marketing CPM is as follows:
CPM = Total Cost / Total Impressions ×1000
Here's a step-by-step example:
Let's say you paid an influencer $500 to create a sponsored post for your product, and the post generated a total of 100,000 impressions.
In this case, your calculation would be:
CPM = 500 / 100000 × 1000 = 5
Therefore, the CPM for your influencer marketing campaign would be $5.
Remember that CPM is a useful metric for comparing the cost efficiency of different marketing strategies or influencers. A lower CPM indicates that you're getting more impressions per dollar spent. However, CPM alone doesn't provide the full picture of the campaign's success. You should also consider engagement metrics (likes, comments, shares), click-through rates, conversions, and overall campaign goals when evaluating the effectiveness of your influencer marketing efforts.
How to Determine the Optimal CPM
So, what is the optimal CPM for influencer marketing? How do you know what you should be aiming for with your campaigns?
In fact, the optimal CPM for your brand will depend on a number of aspects, including the nature of your campaign. Some brands might prioritize brand visibility, making a slightly higher CPM acceptable if it reaches a more relevant audience. However, for campaigns focused on driving conversions, a lower CPM might be preferable, as it implies better efficiency in turning impressions into actions.
Moreover, a higher CPM does not necessarily equate to better performance. While a higher CPM might indicate premium placements or niche targeting, it doesn't guarantee better results. As a result, determining the optimal Cost Per Mille (CPM) involves striking a balance between your campaign objectives, target audience, and available budget.
Optimal CPM Examples
Let's explore a few different examples to highlight how optimal CPMs can differ:
- Brand awareness campaign: In brand awareness campaigns, the emphasis is on reaching a wide audience. Therefore, a relatively lower CPM is acceptable as long as the campaign generates substantial impressions. Optimal CPM Range: $5 - $20.
- Engagement-driven campaign: These campaigns focus on generating engagement rather than just impressions. A higher CPM might be justified if the engagement rates are strong, indicating a highly involved audience. Optimal CPM Range: $10 - $30.
- Niche or specialized campaign: If the campaign targets a specialized audience, the CPM might be higher due to the limited pool of potential viewers. However, the increased relevance to the target audience can result in better outcomes. Optimal CPM Range: $30 - $70+.
- Conversion-driven campaign: Conversion-focused campaigns prioritize generating actual sales or desired actions. The CPM can be higher since the campaign's success is measured in terms of tangible results. Optimal CPM Range: $20 - $50+.
However, it's important to remember that rates will always depend on the type of campaign that you are launching and the size of your target audience. For example, niche-influencers will often have a higher CPM due to their smaller audience size. In this case, it's important to compare your CPM to the actual number of conversions. That way, you will understand the percentage of people who actually act after seeing your campaign.
Ultimately, to determine the optimal CPM for your campaigns, consider your overall objectives, the nature of your product or service, historical campaign data, and industry benchmarks. In addition, regularly monitor Key Performance Indicators (KPIs) beyond CPM, like click-through rates, conversion rates, and return on investment (ROI), to gain a comprehensive understanding of your campaign’s performance. That way, you will have all the data you need to create a successful campaign that will help you reach your goals.