A ‘CPM’ for email ads means ‘Cost Per Thousand Impressions’. Impressions are commonly known as ‘views’ or ‘unique opens’.
You can use a CPM to judge if an email sponsorship/advertising opportunity is expensive, cheap, or just right. CPM pricing structures are also used for various forms of influencer advertising including social media.
To understand how many thousand impressions are in a list, divide the total number of subscribers by 1,000. For example, if you send a newsletter to ten thousand people, you have ten thousand impressions’ (10,000 / 1000 = 10). If this example was charging a CPM of $15, you will pay 10*15 or $150 per send.
How much is a typical newsletter’s CPM?
At Paved, we’ve found that a CPM for a healthy newsletter is somewhere between $15 and $30. In rare instances when a newsletter has an extremely valuable audience (like one who regularly purchases luxury goods), your CPM can increase into the $100+ range.
How do I use a CPM to judge the value of a sponsorship?
The most important thing to remember when looking at an email newsletter sponsorship fee is that CPM does not indicate performance.
The CPM covers all possible impressions and is not a reflection of the number of people your ad will reach – it shows the potential number of times your ad could be served. That’s why stats like open rate and click-through rate are so important. You need them to judge the actual cost of sponsorships.
Try out the calculator below to see how your cost per actual view changes even if the CPM stays the same.
What are good newsletter stats anyway?
An industry newsletter report from Mailchimp claims that anything with an open rate above 10% is above average. But if you’re dealing with interest-based newsletters, you should expect stats like the following:
- Open rate ranging between 25% and 40%
- Click-through rate (CTR) between 2% and 5%
- Unsubscribes around or under 0.1%
- All subscribers should have all opted in to receive emails.
Why CPM is more expensive than calculating based on performance
A $15 CPM on a newsletter with a 10% open rate and a $15 CPM on a newsletter with a 40% open rate dramatically changes your cost per view. While two newsletters might look similar in price, you effectively pay 4x more per impression for the lower performance.
There are two ways to figure out how effective your sponsorship might be.
- “Effective CPM” (also known as eCPM). It is predominantly used in programmatic advertising or performance-based pricing. eCPM is best used for tracked ads that are paid after the sponsorship. With most newsletters requesting payment upfront, it’s not a viable option.
- Audience Value. At Paved, we use a mixture of audience value (how much a particular audience is worth at the current time), and eCPM (number of opens) to calculate fair base pricing. Next, we look at influence potential. Newsletters with fantastic brand value (think Product Hunt or Techcrunch) or above-average engagement and clicks (think Morning Brew and The Hustle) command much higher rates.
Bottom line: Using a CPM alone to price email ads is risky. To get the most value out of your marketing budget, always combine research, audience value, and performance stats.
How to tell if a newsletter is going to perform before buying a sponsorship
Disclaimer: There is no sure-fire way of judging how an audience will react to your ad. The following information is advisory based on our personal experience running thousands of email ads a year.
Let’s take a look at two example newsletters. We’ll call them Abacus Weekly and Bartimus Times. Both newsletters have a modest general-interest audience of 10k subscribers and charge a CPM of $15 which works out to $150 per sponsorship.
|Subscribers||Open Rate||Number of views||CTR||Number of total clicks|
From the table above, we can see that Bartimus times will get us almost double the number of impressions and 1.25x the number of clicks.
An ad on Bartimus Times is worth more than Abacus Weekly. If you were looking to sponsor a newslettter, Bartimus Times is going to get you in the boss’s good books.
A better system than CPM to work out the true value of email ads
A hybrid system that combines opens and number of clicks is the method we’ve come to rely on most.
Here’s the formula:
Open Rate / 100 * Number of Subscribers = Total opens
Total Opens * cost per impression + Number of clicks * cost per click = Sponsorship Fee
So for example, let’s say a click was worth $4 due to a valuable audience and an impression was worth $0.01.
Abacus’s Weekly sponsorship fee
25/100 * 10000 * 0.01 + (20*4) = $105
Bartimus Times sponsorship fee
40/100 * 10000 * 0.01 + (25*4) = $140
Here’s a quick calculator so you can see how it works for yourself.
For brand awareness: Focus on an email’s open rate
The more people that see the ad, the better. Newsletters that perform really well on brand awareness have an open rate north of 30% and a good brand name. These newsletters also tend to perform poorly on clicks in comparison to the cost of sponsorship. They focus on brand alignment instead of instant ROI.
For conversions: Focus on the number of clicks a newsletter receives
Most newsletters consider the click-through rate (CTR) to be the total number of clicks a typical send gets.
The CTR is a good performance metric but it doesn’t give you insight into the number of clicks an ad gets.
Factors that influence clicks are:
- Positioning of ad
- Number of other links in the email
- Number of other advertisers in the email
- Quality of the ad copy and creative
Let’s go back to Abacus Weelky and Bartimus Times example.
|Subscribers||Total CTR||Total clicks||# of links in newsletter||# of ad clicks||Ad CTR|
Above we’ve introduced a new metric. The ad CTR. You should always ask publishers for their average ad CTR if you want an accurate expectation of performance.
Can I pay per click on newsletters?
No. Not unless you use programmatic advertising solutions or a custom CPA-model with a publisher. (Link to our Ad Network?)
However, you can calculate a rough estimation of what you will be paying per click.
We find most newsletter sponsorship prices work out between $1 and $5 CPC (cost per click). You can research how much people are paying for your target audience by checking out other social media CPC plans.
According to WebFX, Facebook charges an average of $0.97 and LinkedIn is around $5.26 on. In a quick study Paved completed in 2020, we found that LinkedIn charges up to $33 per click for high-value audiences. You can get the full breakdown here.
How to find newsletters and book email ads
There are plenty of ways to find newsletters on a case-by-case basis. However, if you’re looking for a centralized marketplace with over 600+ newsletters, we’ve got you covered.
We wrote this blog post for Paved because we want to demystify email advertising and use our tech to standardize newsletter sponsorship. If email ads are something you want to do more of, sign up to Paved’s Marketplace where you’ll find hundreds of publishers across all categories.