What does "Cost Per Impression" Mean?

Cost per impression is a form of measurement used in online advertising. It refers to the cost of one view of a banner ad, text ad, or similar forms of advertisement used on the Internet. For example, a banner ad placed on a website might cost $0.01 United States Dollars (USD) every time someone navigates to that website and the banner appears. This amount, $0.01 USD, which is charged to the advertiser, is the cost per impression. This kind of Internet marketing campaign is extremely popular, along with pay per click ads, and often has the potential to be very cost effective.

To set up a cost per impression ad campaign, Internet advertisers normally decide how much they can pay per impression while still making a profit if they are selling something. If an ad costs $0.01 USD per impression, but only one person out of 100 actually clicks on the ad and purchases something, the advertiser needs to make $1 USD to break even. It is likely the product costs much more than $1 USD, however, so the marketing campaign may be successful. For example, if the product costs $50 USD, the advertiser made a profit of $49 USD, minus the amount spent on creation of that product. Cost per impression ads are not always used to make money, however; public health advocates, animal rights groups, and political figures sometimes use cost per impression campaigns to educate others or attempt to win favor among locals.

Cost per impression is not to be confused with cost per click-through or cost per lead, which are both much different. A click-through is when a person clicks on an ad, whether an obvious ad or a cleverly disguised promotion. The person is clicking through to another website, so cost per click-through refers to the cost of this action. Cost per lead refers to the cost of when a person both clicks through and then signs up on the other website, usually for a paid service. Click-through and lead campaigns are often more expensive than cost per impression ones.

As an advertising technique, there are some downsides to utilizing the cost per impression model. For example, a specific impression that is being paid for may not be looked at by the person to whom the ad is being served. If the person the ad is being served to does view the ad, he or she may not even be interested in it. The possible irrelevancy of the advertising to the people who may be viewing it is something that an advertiser may want to take into account when engaging in this type of advertising.