Library > Cost-per-mille (CPM)

Cost-per-mille (CPM)

Written By Maria del Mar Vázquez Rodríguez

Cost Per Mille (CPM) is a fundamental metric in the world of advertising that quantifies the cost an advertiser incurs for every 1,000 impressions of their ad. 

As a widely used metric, CPM plays a crucial role in helping advertisers evaluate the efficiency and cost-effectiveness of their advertising campaigns.

By understanding CPM, advertisers can make informed decisions about budget allocation and optimize their ad spend to maximize their return on investment.

This is what would be explain in the library article:

What is Cost Per Mille?

Cost Per Mille (CPM) is a widely used advertising metric that measures the cost incurred by an advertiser for every 1,000 impressions of their ad. It is commonly used in online advertising, particularly in display advertising, where advertisers pay a fee based on the number of times their ad is displayed to users.

Synonyms

  • Cost Per Thousand

  • Thousand Impressions Cost

  • Cost Per Mille Impressions

Why is CPM important?

CPM is an important metric for advertisers as it helps them evaluate the efficiency and cost-effectiveness of their ad campaigns. By understanding the CPM, advertisers can determine how much they are paying to reach a specific number of potential customers. This information is crucial for budgeting and optimizing ad spend to maximize return on investment (ROI).

How does CPM Work?

CPM works by establishing a fixed rate that advertisers pay for every 1,000 impressions their ad receives. An impression refers to each instance where an ad is viewed by a user, regardless of whether the user interacts with the ad. Advertisers typically negotiate CPM rates with publishers or advertising networks.


When an ad is displayed on a website, it counts as one impression. If the same ad is displayed to a thousand users, it would generate a total of 1,000 impressions. The advertiser pays the agreed-upon CPM rate multiplied by the number of thousands of impressions (or "mille" in Latin) their ad receives.

How do you calculate CPM?

CPM is calculated using the following formula:

CPM = (Total Cost of Ad Campaign / Total Number of Impressions) * 1,000

For example, if an advertiser spends $500 on a campaign that generated 100,000 impressions, the CPM would be:

CPM = ($500 / 100,000) * 1,000 = $5

The CPM in this case would be $5 per 1,000 impressions.

FAQs

Q: Does CPM guarantee conversions or sales?

A: No, CPM only measures the cost per impression. It doesn't guarantee any specific outcome, such as clicks, conversions, or sales. However, CPM can provide valuable insights into the cost efficiency of an advertising campaign.

Q: How can I lower my CPM?

A: There are several strategies to lower your CPM. You can optimize your targeting to reach a more relevant audience, improve the quality and relevance of your ads, adjust bidding strategies, and negotiate better rates with publishers or advertising networks.

Q: Is CPM the same as CPC (Cost Per Click)?

A: No, CPM and CPC are different metrics. CPM measures the cost per 1,000 impressions, while CPC measures the cost per click, which is the amount an advertiser pays each time a user clicks on their ad.