CPM, also known as Cost per Thousand Impressions, is a common metric used by the online advertising industry to measure the effectiveness of advertising campaigns. Calculating CPM is simple: divide the total cost of the campaign by the number of impressions received, multiplied by 1000. But here's the real question: what defines a "good" CPM, particularly in the context of influencer marketing? We'll explore what type(s) of creators to partner with for a more cost-effective advertising campaign based on thousands of influencers CPM-rates.

The value of CPM in Creator Marketing

‍‍CPM plays an important role in evaluating the cost-effectiveness of creators. As an advertiser, this metric shows you how much you pay a creator for every 1000 views. Essentially, CPM allows you to compare the creators bid, to their follower size and their average reach, factoring in the production of content into the overall rate.

The average CPM is calculated from the creator's last 90 days of organic impressions across their posts. We take the creators rate, divide it by the avg. organic impressions of the past 90 days, divided by the number of posts, and finally multiply by 1000. The organic CPM of a creator enables advertisers to understand how much it costs to a) produce content and b) display content to 1000 viewers (organically).

Factors that affect creators rates

‍While a lower CPM typically signifies a more cost-effective campaign, advertisers shouldn’t always only select the creators with the lowest CPM’s. Because while CPM shows the advertiser how much it costs to work with a creator in order to reach 1000 impressions, there are many other factors to consider when selecting creators to work with.

1. Industry
   One of them is the industry in which creators operate. For instance, in the travel or luxury goods industry, advertisers often expect and value professional quality content, leading creators to ask for higher fees.
2. Time and effort
   Another factor contributing to the variability in creator fees, and consequently CPM’s, is the time and effort that it takes for creators to make the content. Different industries require diverse levels of effort, impacting the overall cost for creators.
3. Engagement rate
   The engagement rate of an influencer is a critical factor influencing their rates. A high engagement rate often indicates that the creator's content resonates well with their audience, leading to better campaign outcomes. Creators with a more engaged audience can command higher fees because their influence is likely to drive more meaningful interactions, such as likes, comments, and shares, which are valuable for brand awareness and conversion.
4. Avg. reach rate
   Similarly, the average reach rate, which measures the extent to which content is seen by the creator's audience, also affects rates. A creator with a broad reach can significantly amplify a brand's message, making them more valuable to advertisers. This metric is particularly important in campaigns aimed at increasing brand exposure or tapping into new market segments.

Interpreting ‘good’ CPM’s

‍Factors such as industry benchmarks, specific advertising goals, and the choice of platform among many others, influence the assessment of a CPM, and this makes it difficult to set a benchmark for what a “good” CPM is.

Looking at the examples below, we observe two creators who applied to a campaign on our platform. The campaign's objective was to increase awareness for a makeup brand, specifically targeting women aged 25 to 34 in the United States. To compare these two creators effectively, let's break down their metrics and analyze their potential impact on a marketing campaign.

1. Engagement and Reach: Creator 1 has a significantly higher engagement rate and average reach, indicating a more active and responsive audience. This could lead to better campaign performance despite a smaller follower base.‍
2. CPM and Cost Efficiency: Creator 1's organic CPM is much lower, suggesting more cost-effective reach. Combined with the high engagement rate, this creator might offer better value for money.
3. ‍Demographics: Both target predominantly female audiences, but differ in age groups and geographical locations. This is crucial depending on the campaign's target demographic.
   Given these metrics, the choice depends on the specific goals and target audience of your campaign. If engagement and cost efficiency are priorities, Creator 1 seems more suitable. For broader visibility in the U.S., particularly among a slightly older demographic, Creator 2 might be considered.

Connecting this to The Cirqle's platform, where over 1 million creators are registered, every time creators apply to a campaign, they set their bids for the requested deliverables. This means the creator decides on their desired compensation. In order to benchmark these bids and their CPMs, we have analyzed over 350.000 creator applications.

The Cirqle Benchmarks‍

On our platform, we categorize creators into five tiers, ranging from nano to mega. We studied 350.000 creator applications and took the industry averages for each Instagram and TikTok creator application. This average revealed insightful patterns and trends across different tiers, highlighting distinct characteristics and engagement metrics.

The tables below shows the average rates of creators in each tier, the average CPM for each tier, the average engagement rate for each tier, and the average reach for each tier for both Instagram and TikTok. While these statistics provide valuable insights, it's important to note that the outlined performance metrics are based on creators' organic metrics. The way things work organically might be different when we talk about performance. So, any final thoughts need to consider this difference with care and thoughtfulness.

Instagram CPM's:

• Reach vs. Follower Count:‍
  Micro-influencers, with follower counts between 10,000 to 49,999, boast the highest reach at 15.7%. This means, on average, each post by a micro-influencer is likely seen by approximately 1,570 to 7,853 followers, considering the range of their follower count. In contrast, macro-influencers, despite having a much larger follower base (500,000 to 999,999), have a significantly lower reach percentage of 3.2%, translating to an average reach of 16,000 to 31,998 per post.‍
• Rate vs. Follower Count:
  The rate per post increases more than tenfold from nano to macro tiers, with nano influencers charging €154 and macro influencers charging €3,662. This suggests a higher perceived value or impact associated with macro influencers.
• CPM Efficiency:
  Comparing nano and macro tiers, there’s a drastic decrease in CPM, with nano influencers having a CPM of €329 and macro influencers at €47. This means advertisers pay approximately €282 less per thousand impressions when they opt for macro influencers compared to nano influencers.
• Cost-Effectiveness:
  If we consider the cost per percentage point of reach, micro-influencers cost approximately €25.11 (€394/15.7%) per percentage point of reach, while macro influencers cost approximately €1,144.38 (€3,662/3.2%) per percentage point of reach. This stark difference illustrates that micro-influencers are significantly more cost-effective when considering the reach-to-cost ratio.
• Cost-Effectiveness:
  For a budget of €10,000, an advertiser could sponsor approximately 64 nano influencer posts (€10,000/€154), potentially reaching up to 8,455 people per post on average, considering their 13.2% reach. Conversely, the same budget would afford only 2.7 posts from a macro influencer (€10,000/€3,662), but each post could potentially reach up to 31,998 people, given their 3.2% reach which is significantly higher than the micro influencers.

Instagram Marketing Strategy Consideration:

‍An advertiser looking for targeted engagement might prefer micro-influencers, who offer a higher average reach per post. In contrast, a strategy focusing on brand visibility might leverage macro-influencers, who, despite lower engagement rates, offer a broader reach and more cost-effective CPM.

These numerical insights can help advertisers on The Cirqle platform to make more informed decisions about which influencer tier aligns best with their marketing objectives and budget considerations.

TikTok CPV's:

• Reach vs. Follower Count:
  Micro-Influencers (10,000 - 49,999 followers): With an average reach of 38%, micro-influencers reach a significant amount of their follower base. Their posts, on average, are typically seen by 3,800 - 18,999 followers.
  Macro-Influencers (500,000 - 999,999 followers): With a much larger follower base than micro-creators, have a significantly higher reach (average of 61% p/post) than micro-influencers. This translates to an average reach of 305,000 - 609,999 per post, which is considerable in absolute numbers and much higher compared to micro-influencers.
• Rate vs. Follower Count:
  The rate per post dramatically increases with the influencer tier, from €253 for nano influencers to €2460 for macro influencers. This progression indicates a perceived increase in value and impact associated with larger follower counts.
• CPV Efficiency:
  The Cost Per View (CPV) increases per influencer tier, suggesting higher costs for more extensive reach. However, the increase in CPV is not proportional to the increase in follower count, indicating increasing returns in cost efficiency at higher tiers.
• Cost-Effectiveness:
  When considering cost-effectiveness, micro-influencers stand out due to their higher engagement rates and relatively lower costs. For instance, micro-influencers offer a cost of €0.27 per view, which is lower than macro influencers at €0.50 per view, despite having a significantly higher average reach percentage.
• Budget Allocation:
  For a fixed budget, the choice between different influencer tiers can significantly impact reach and engagement. A larger number of posts from nano or micro-influencers could yield higher total engagement, whereas a few posts from macro-influencers could ensure broader visibility.

TikTok Marketing Strategy Consideration:

The choice of influencer tier should align with the specific goals of a marketing campaign. If the goal is targeted engagement and building a community, micro-influencers might be more effective. In contrast, for broad brand visibility and reaching a larger audience, macro-influencers could be more suitable.

Maximize impact for paid

The way things work organically might be different when we talk about performance. So, any final thoughts need to consider this difference with care and thoughtfulness. For paid marketing, we advise advertisers to partner with creators from multiple tiers. This approach lets you customize your campaign according to your budget, optimize costs per thousand impressions, engage with diverse audiences, reach a broader demographic, and allocate your budget strategically for specific campaign goals. In simple terms, teaming up with creators from different tiers gives you a versatile toolkit to make your creator marketing strategy more effective

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