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CPM in Email Marketing: Everything You Need to Know
Arm Yourself With the Knowledge to Negotiate Your Best Sponsorship Deal
Lenore Sterner & Megan Smith
August 19th, 2024
This article has been updated to maintain its accuracy and relevance
If you’re one of the 123 million people who watched the 2024 Super Bowl, you probably wondered about the ads and the steep cost of marketing during the event.
A 30-second ad cost $7 million to reach those 123 million people, meaning that the CPM for each ad was approximately $71.
You’re probably wondering what exactly that means, and don’t worry, I got you. CPM stands for cost-per-mille, or cost per 1000 views– meaning that for every 1000 people who viewed that Super Bowl Ad, the advertiser paid $71.
The Super Bowl is an extreme example in marketing for CPM at work, but the same basic concept applies to any advertising that you do in your email marketing campaigns. If you run an ad in your newsletter, you may be paid on a CPM basis, getting a set amount per 1000 subscribers that you send to.
Understanding CPM is absolutely critical for advocating for yourself as a creator and getting the best possible sponsorship deals. So, let’s talk about what CPM is, strategies you can employ to get a higher CPM, and best practices to ensure the best possible results from your campaigns.
Table of Contents
TL;DR
Understanding how CPM is calculated and the advantages and disadvantages of this pricing model is crucial for effective email marketing campaigns.
Optimizing elements like subject lines, responsive design, and personalization can significantly improve open rates and increase your CPM.
Building a high-quality email list through effective list growth strategies, maintaining list hygiene, and fostering subscriber engagement and retention are essential for higher CPM.
Tracking key performance metrics, conducting A/B tests, and continuously optimizing campaigns based on data insights can help identify areas for improvement and raise your CPM over time.
Following compliance regulations, data privacy best practices, and industry standards ensures a positive sender reputation, better deliverability, and ultimately, higher CPM.
Understanding CPM in Email Marketing
While CPM as a whole isn’t difficult to understand, there are some key differences to CPM in an email platform vs other platforms, like YouTube or TikTok, where the CPM is directly tied to the results.
What is CPM?
In CPM email marketing, companies pay for email advertising based on what's called a cost per mille, or CPM. "Mille" is the Latin for thousand, and CPM is the cost per thousand impressions or views.
To put it another way, the CPM is the price an advertiser pays for their ad to be shown 1,000 times as people engage with online content.
For example, if you land a sponsorship with an $8 CPM, and you have an audience of 100,000 subscribers, the cost of the sponsorship is $800. That’s a solid chunk of change— and way too good of a hypothetical opportunity to pass up.
There are two other major metrics that you’re likely to encounter in email marketing:
Cost per click: Just like it sounds like, you’re paid based on how many people click the ad. If you have an engaged audience, this works well even if your list is small because you’re getting paid for the quality over the quantity.
Cost per acquisition: This is the total cost that a business pays to “acquire” a customer through all steps of their funnel.
How Does CPM Work in Email Marketing?
CPM for email marketing is a little bit different than CPM for other platforms. When you’re paid on a CPM basis for an email, you’re paid based on the number of subscribers you have and the potential for them to read your email– not on how your email actually performs.
Paying for a CPM based on subscribers is very different from a sponsorship for something like YouTube, where you’re paid after a certain amount of time based on the amount of views your video received.
This makes calculating how much to pay you out very simple for the advertiser, but if you want that advertiser to be happy with their investment and run an ad again, you’ll have to show them the numbers that the email performed as expected.
Your CPM is calculated based on how engaged your audience is. The more engaged your audience, the higher the CPM a brand may be willing to pay to advertise on your newsletter, and how much they may be willing to pay for future sponsorships if you can show them their ROI justifies the CPM they’re paying.
ROI for the Advertiser
As in any other kind of marketing, getting a good return on investment (ROI) is essential for success. But what does a good ROI for a sponsor actually look like?
A difficult question to answer. An often-cited number is email marketing's 3600% ROI — for each dollar spent, you receive a return of $36. However, like most email marketing statistics, this number represents direct brand-to-subscriber communications. It doesn't cover newsletter sponsorships.
A more relevant number might be the average ROI for social media marketing: 280%. But there are problems with that analogy, too.
Ultimately, it will be up to you to figure out the ROI you can offer potential advertisers. Consider factors such as open rates and ad click-through rates (CTRs) in addition to total subscribers. And remind them that they will also receive indirect returns in the form of heightened brand awareness and positioning.
What Is the Average CPM for Ads?
CPM is a fairly common pricing structure across digital channels. CPM rates vary across industries, platforms, locations, target audiences, and more. Generally speaking, an average CPM lies between $3-10 USD.
By channel, the average CPMs in 2024 were:
Meta (Facebook and Instagram): $7.94
TikTok: $3.74
Twitter/X: $3.11
YouTube: $4.39
The price of advertising can also fluctuate throughout the year. Across a year-long period starting in the fourth quarter of 2022, the average CPM for social media varied from $5.32 to $6.06. Those prices were highest in the last few months of the year as advertisers tried to grab their share of holiday purchases.
What Is $3.50 CPM?
Let's put numbers to this idea. Company X wants to advertise in Creator Y's newsletter. Creator Y has a list of 10,000 subscribers and charges a CPM of $3.50. Multiply that cost by the number of subscribers/1,000 to find that Company X needs to pay Creator Y $35 to feature its ad in an issue.
Frankly, I think Creator Y can do better. Their audience is incredibly engaged, and their most popular features are high-end product reviews and roundups. Their readers come to them in search of the best places to spend their money.
That’s why a CPC (Cost-per-click) pricing structure (like beehiiv’s ad network) would work better for both Company X and Creator Y. The Creator can earn money for their engaged subscribers clicking the advertisement, as opposed to a number of views that may or may not actually be leads for Company X.
What Is the Average CPM for Email Marketing?
It varies. And unlike other channels for CPM marketing, it's difficult to aggregate data across platforms and publications. Some people also blur the distinction between dedicated email marketing (direct emails sent by a brand as part of a campaign for that brand) and marketing in email publications such as newsletters. And a lot of smaller brands opt for flat fees instead of CPMs.
Not happy with that non-answer? I've seen estimated averages that range from $3-15, and certain niches can go higher. These numbers come from online forums, newsletter services, marketing websites, etc. — and none of them can be cited as a definitive authority. (Sorry.)
How Do You Calculate CPM for Emails?
Let's say that you prefer to go with flat fees instead of charging sponsors a CPM rate. How can you translate this into email marketing CPM?
Simply divide the fee you charge by your total number of subscribers. That's the average cost per email subscriber.
Now multiply that number by 1,000 to find the CPM.
What if you want to know the CPM for a business's email marketing campaign? Tally all associated costs with the campaign, such as list rental fees, hours logged, and creative expenses. Then divide that number by the total number of emails on the list used and multiply by 1,000.
How Do You Price an Email Ad?
Yet another good question. (You're really on a roll, here.) There are many factors that influence newsletter ad prices.
In figuring out how to set your own rate, start by taking a hard look at your key metrics. The goal is to put numbers to the value you can offer sponsors. In addition, consider factors such as niche saturation, reader intent, and audience demographics.
Remember that there are also other kinds of email newsletter sponsorships. Cash is nice, but it's not the only possible compensation a business might offer you.
Advantages and Disadvantages of CPM Pricing
CPM pricing isn’t for everyone. While it may be easy and convenient for all parties involved, it has a higher barrier to entry than other options, such as a CPA (cost per acquisition) or a CPC (cost per click).
Advantages of CPM Pricing
CPM pricing is easy and convenient for both you as the creator and the advertiser. The advertiser doesn’t have to use complicated formulas to figure out how much to pay you.
They pay you for the full potential of your email list without waiting to see how it performs. This can be a major benefit to you because you’re still paid, regardless of how the email actually does with your subscribers.
Because the advertiser is paying you a set amount per 1000, you have the ability to really hone in on your audience using segments. Use the information that you know about your readers to segment your audience and make sure that the ad gets in front of the people who are already engaging with you and best fit within the advertiser’s target audience.
When done successfully, using that tactic is a way to show the advertiser that their investment into your channel is worth it with the numbers to back it up.
Disadvantages of CPM Pricing
The biggest disadvantage of CPM pricing is that it has a high barrier to entry: in order to make money, you need to have thousands of subscribers. This puts monetization out of reach for a lot of creators.
Another disadvantage of CPM pricing is that you’re paid before seeing the results driven by the newsletter. This means if the newsletter the ad is contained in goes viral, you possibly lose out on money that you would have earned had you used a results based metric.
Using this example, if the email were to go viral and you were getting paid on a CPC basis, you would generate more revenue than you would have using the CPM method because more folks would have seen and clicked the advertisement.
With beehiiv’s ad network, you can enjoy a CPC model– making it easier for a smaller publications to succeed.
The biggest advantage of a CPC over CPM is the earning potential. Smaller creators with an engaged audience can make money– without waiting to have thousands of subscribers to market to.
beehiiv’s ad network encourages you to do what you do best: create world-class content and build relationships with your audience.
Optimizing Email Content and Design for Higher CPM
Engagement is the name of the game in email marketing. Crafting emails that lead to a higher CPM is a no-brainer when you are already focused on building an engaged audience.
Engaging Subject Lines and Preheaders
Your subject line and preheaders are the first impression that your readers have of your email send– and according to 2023 research, 63% of people choose whether or not to open an email on the subject line alone.
That’s a lot of people judging your email by its cover, but it shows just how critical crafting the perfect subject line and preheader are for your campaigns. If you want people to open your emails, click your links, and overall engage with your email, your subject line is the first encouragement they have to do so.
Responsive and Mobile-Friendly Design
Let’s face it– in 2024, most people will be reading and consuming content on their mobile devices. Optimizing with a responsive and mobile-friendly design lets your readers enjoy your content, regardless of their device.
Don’t lose out on engaged subscribers because your design isn’t mobile-friendly. 81% of people who use a mobile device such as a phone or tablet prefer to use their phones to read email.
Segmentation and Personalization
I mentioned above about segmenting your audience to get the ad in front of people most likely to engage, but you can also use segments to personalize the experience for your readers.
For example, you can create a segment based on the country your readers are from and send the ad accordingly. Not only can this be helpful to reach the advertiser’s target audience, but you can also adjust your ad copy and the newsletter itself to increase views based on your audience’s location.
Better still– personalize your subject lines. Research shows that open rates can be increased by 50% when using personalized subject lines.
Building and Maintaining a Healthy Email List
It’s so important to build not just a list, but a healthy list, filled with engaged subscribers that are loyal to your content.
Growing Your Email List
Growing your email list is always a priority. However, you want to make sure that you’re growing your list with engaged followers.
The quantity of subscribers doesn’t mean much when none of them are opening or reading your emails. What matters is the quality and how your audience is engaging with the content.
Email List Hygiene and Pruning
While it may sound counterintuitive to your goals, removing users who aren’t engaging with your emails can actually make you more money in the long run.
Consider that the advertiser sponsoring your email is looking at your metrics to determine if their ROI was worth the CPM that they paid you. An unengaged subscriber is going to drive down numbers like your open rate and click-through rate and make your email appear to perform worse than it did.
Instead, clean your list regularly of readers who are no longer engaging with your emails. This will give the most accurate representation of how engaged your subscribers are, and likely give you higher KPIs (more on that below) to negotiate a higher CPM.
As an added bonus, cleaning your list regularly helps your deliverability because the more people who engage with your emails, the less likely your email is to get caught in a spam filter.
You can also create re-engagement campaigns for people who haven’t opened your emails in a long time, asking for them to engage with your newsletter. If they don’t engage, remove them from your list.
Tracking and Analyzing Email Marketing Metrics
If you want to improve your earning potential through monetization, start by improving key metrics like click-through rates and open rates.
Key Performance Metrics to Monitor
Here are a few of the metrics to pay attention to to see how your newsletter is performing:
Open Rate: The number of readers who opened your email.
Bounce Rate: The number of emails that aren’t delivered for any reason.
Click-through Rate: The number of readers who clicked a link in your email.
Conversion Rate: The number of readers who took the action that you used in your call-to-action.
While all of these metrics can provide valuable insights and opportunity for growth, don’t sleep on the power of zero-party data. This is data that your audience gives you directly, through a feedback form or survey, and lets you know exactly how you’re doing (through the eyes of your audience members).
A/B Testing and Experimentation
Don’t be afraid to experiment and see what works. beehiiv offers A/B testing to test things like subject lines so you can gain insights into how your audience responds.
When using A/B testing, you’re gaining statistically valid information about what your audience prefers– giving you a powerful decision-making tool based on audience behavior. Recent surveys saw an increase of 28% in ROI when using A/B testing.
Compliance and Best Practices in Email Marketing
Compliance with security mandates and laws not only keep you out of legal trouble, but they are also critical for your deliverability – and a delivered email is crucial for engagement.
Opt-In and Permission-Based Email Marketing
It’s important to make sure that your subscribers actually subscribed to your emails. Opt-in is the strongest way to ensure that your subscribers consented to receive your marketing materials.
Remember, if someone hasn’t consented to receiving your emails, it isn’t legal to send your newsletter to them.
Privacy and Data Protection
The two major laws to stay abreast of are GDPR and CAN-SPAM– both require you to take steps to protect the privacy, data, and security of the people whom you are emailing.
If you are marketing to subscribers in the United States, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (or CAN-SPAM) is the primary regulation governing email marketing. And if you are marketing in Europe, the same can be said of the General Data Protection Regulation (GDPR).
It’s important to familiarize yourself with both sets of laws to ensure that you are staying compliant, regardless of who you market to or where they are located.
Email Marketing Best Practices
The best way to be effective at email marketing is to be genuine and authentic. At the end of the day, your audience signed up to receive your emails because they want to hear what you have to say.
It’s that authenticity that leads to your audience trusting you, so when you do have sponsored posts, they’re more likely to engage, click the links, and consider purchasing your products and services.
Final Thoughts
CPM is used commonly in marketing– but is it really the best way to pay creators? It can take months, or even years, to reach a substantial audience.
beehiiv uses CPC exclusively– meaning that even small creators have the opportunity to make money on the platform. Try your free 30-day trial with beehiiv today.
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