What does CPI stand for?
CPI is the abbreviation for cost per impression. It is a billing method for advertising campaigns in which costs are only incurred when the user sees an advertisement on the accessed website.
How does the CPI (cost per impression) model work?
CPI is widely distributed as a billing method in online marketing. Providers make advertising space available to companies or advertisers on their website. The costs depend on the awareness of the page, the frequency of the ad display, and the placement of the ad on the landing page. In the CPI model, the advertiser therefore considers in advance how much budget he wants to invest in his ad. This can be set for different periods of time, e.g. monthly, per quarter, etc. If the budget is as close as possible to being spent, the ad will be displayed less on the website.
The design of the ads can be determined individually by the advertiser, just as with display ads.
With this method, each individual insertion (impression) is chargeable. It does not matter whether the user actually clicks on the ad.
How do you calculate the costs for the CPI (cost per impression) model?
Every company’s advertising budget varies depending on its size and goals, which also makes advertising costs quite individual.
Cost per Impression is a fee model where advertising costs are calculated based on different metrics. That is why there is no simple calculation formula. A key factor in the calculation is the market value of the website on which the advertising is to be displayed. For example, a website with a high profile and therefore a lot of traffic will incur higher costs per ad than a rather unknown site.
In addition, both the placement of the ad within the website and the frequency of insertion play a significant role.
When calculating the price, companies set a fixed amount per day and a maximum amount for the entire campaign. This guarantees that the maximum amount is not reached on the first day, for example, and that advertising is therefore displayed over the entire period.
The billing method is usually based on a price per thousand contacts. This means that the price is not calculated on the basis of each individual ad insertion, but on the basis of a contract for ad insertions, which usually comprises 1000 units. This amount is charged to the advertiser on a monthly or weekly basis, depending on the payment model.
What is the cost-per-impression model used for?
Advertisers use the CPI model as a marketing channel to increase the reach of their own brand awareness by displaying ads on industry-specific sites in order to increase their market share and revenue in the future. Webmasters who provide advertising space on their website use this type of ad design as an additional source of revenue.
Depending on the product, it can make sense to place more ads on certain days of the month, but also at times of the day itself, or to adjust the design, as this is when the target group is clustered or more specific on the web.
What are the advantages and disadvantages of cost per impression?
One advantage of the CPI model is the calculable costs for the advertising company. Another significant advantage of the CPI model is the additional reach it generates, which allows companies to increase their market awareness in a short period of time. In addition, placements on certain websites can enhance the image, which in turn can have a lasting impact on a company’s sales.
However, one disadvantage of the CPI model is the high degree of dispersion. Even if the advertising itself is specifically displayed on websites that serve a part of the customer segment, it is by no means guaranteed that these customers are currently also looking for the product offered. The profitability of such a marketing campaign can be determined with the help of analysis software. For example, if appropriate tags are used, the origin of the traffic can be analyzed there.