TL;DR: Digital advertising is driven by numbers, with Cost Per Impression (CPI) being a crucial metric. Understanding CPI can help optimize ad spend and campaign effectiveness.

• Definition: CPI is the cost an advertiser pays per ad view.
• Calculation: CPI = Total Ad Cost / Total Impressions.
• Platform Variations: CPI varies across platforms like Google and Facebook.
• Ad Fraud Impact: Ad fraud inflates CPI, wasting budget and skewing performance metrics.
• Optimization Strategies: Use verified platforms, ad verification services, and advanced anti-fraud technologies.

Digital advertising is driven by numbers.

Costs, clicks, and conversations are constantly evaluated to determine the success and efficiency of ad campaigns. Among these metrics, Cost Per Impression (CPI) stands out as a key player. But what exactly is CPI, and why does it matter?

Think of CPI as the cost of getting your ad seen. Each time someone views your ad online, it counts as an impression. Understanding and optimizing CPI can significantly impact how effectively you reach your audience and manage your advertising budget.

What is Cost Per Impression?

Cost per impression (CPI) is an important metric in digital advertising. It essentially refers to the cost an advertiser pays every time their ad is viewed. Since impressions are typically measured by the tens of thousands, cost per mille (CPM) is often used instead. This refers to the cost an advertiser pays for every one thousand impressions.

Every advertiser wants their campaign to be a success. CPI provides crucial insight into the reach and efficiency of their strategy to help make improvements. Here are a few ways CPI can be used:

• Budget Planning: CPI allows advertisers to estimate how much they need to spend to reach their preferred audience size.
• Campaign Optimization: Tracking this metric empowers advertisers to compare performance across platforms and placements to optimize their ad budget and ROI.
• Benchmarking: Advertisers can use CPI to compare campaign performance against industry averages or competitors.

CPI is not just about tracking the number of impressions or pricing online ads. When analyzed besides other metrics like click-through rate and conversation rate, it provides valuable insight into the effectiveness of your advertising efforts.

How is CPI Calculated?

It is simple to find out how much your ad impressions cost. The easy-to-follow cost-per-impression formula goes:

Here is the cost per impression formula in action; If you spend $100 on an ad campaign and your ad receives 10,000 impressions, your CPI would be $0.01 (100 / 10,000). This means you paid one cent every time your ad was shown.

The average cost per a single impression is often cents. That’s why CPM is typically used to determine the cost per thousand impressions.

Average Cost Per Impression Across Platforms

While the core formula remains the same for most platforms, cost per impression varies depending on where ads are displayed. For instance, Google’s cost-per-impression average is anywhere from fifty cents to $1,000 dollars per 1,000 impressions. While Shopify recently shared that Facebook ads cost approximately $9.88 per 1,000 impressions.

These numbers are constantly changing based on factors like seasonality, trends, target audience, and even ad placement. Both platforms also use real-time auctions to determine which ad gets shown. The competition and bids can change constantly, causing CPI to fluctuate.

Google and Facebook cost per impression can vary based on the time of day and day of the week in this highly competitive landscape.

How Ad Fraud Impacts Cost Per Impression

CPI, like other digital advertising metrics, is not immune to the effects of ad fraud.

Fraud can artificially increase the number of impressions, leading to inflated CPI.

Consider this example we’ve discussed before; Your company pays for 20 million impressions per month, with 25% of those impressions being bad (the industry standard bad impression rate), and pays $5 per thousand impressions. In this case, you might be losing $25,000 per month to ad fraud.

Wasted budget is not the only consequence of an inflated CPI. The incorrect metric also makes it difficult to measure the effectiveness of a campaign as you never know if your ads have reached real users. These worthless impressions reduce the overall return on your ad spend and result in wasted time and dollars.

Optimize Your CPI

Ad fraud does not have to be your new normal.

Detecting fraud early is one of the best ways to protect your advertising efforts and regain trust in your digital marketing metrics. Anura uses a system which was built over decades to identify and put a stop to fraudulent traffic in real time.

Stop wasting money on traffic that will not convert. Try Anura today for free and see the difference for yourself.