CPM
Cost per Mille
Quick definition
Cost per mille (CPM) is the cost of 1,000 ad impressions, calculated as advertising cost divided by impressions and multiplied by 1,000.
Formula
CPM = Advertising Cost ÷ Impressions × 1,000
Formula variables
- Advertising Cost
- The spend attributed to the ads in the measurement period.
- Impressions
- The number of times the ads were served, as counted by the platform that reported the cost.
Worked example
- Advertising cost
- $900
- Impressions
- 300,000
900 ÷ 300,000 × 1,000
Result: $3.00
Reaching 1,000 impressions cost $3.00 on average. The figures are illustrative.
How to interpret it
CPM measures the price of exposure. It is most useful where you pay per impression, or when comparing how expensive it is to reach audiences on different placements.
A low CPM does not mean good value: cheap impressions can be low in attention or relevance. Pair CPM with CTR and downstream results.
When it is useful
- Comparing the price of reach across placements, audiences and platforms.
- Planning awareness campaigns where impressions are the buying unit.
- Diagnosing a rise in costs when CTR and conversion rate have not changed.
Limitations
- Impressions are counted differently by different platforms, so CPM is only comparable under comparable counting.
- It ignores whether anyone noticed or acted on the ad.
- It combines repeat exposures to the same people with first exposures.
Common mistakes
- Using CPM as a quality measure instead of a price measure.
- Forgetting the ×1,000 and reporting cost per impression.
- Comparing CPM across formats that are not alike, such as video and static display.