CPM stands for Cost Per Mille, which is a marketing metric representing the cost an advertiser pays for one thousand views or impressions of a digital advertisement. The term "mille" is Latin and Old French for "a thousand," which is why CPM is often referred to as cost-per-thousand (CPT).
Understanding Cost Per Mille (CPM)
CPM is a common pricing model in digital advertising, particularly for display ads, video ads, and native advertising. It helps advertisers understand the cost efficiency of their ad campaigns based on exposure rather than clicks or conversions.
- Cost Efficiency: CPM allows advertisers to gauge how much they are paying to have their ad shown to a large audience.
- Brand Awareness: It is primarily used for campaigns focused on increasing brand visibility and awareness, where the goal is to maximize the number of people who see the ad.
- Pricing Model: Publishers and ad networks often quote ad space prices in terms of CPM.
How is CPM Calculated?
Calculating CPM is straightforward. You divide the total cost of an ad campaign by the total number of impressions generated, and then multiply the result by 1,000.
CPM Formula:
CPM = (Total Ad Campaign Cost / Total Impressions) × 1,000
Example:
If an advertiser spends $500 on an ad campaign that generates 100,000 impressions, the CPM would be:
CPM = ($500 / 100,000) × 1,000 = $5
This means the advertiser pays $5 for every 1,000 times their ad is displayed.
Key Aspects of CPM
CPM is a fundamental metric for evaluating the reach and cost-effectiveness of advertising campaigns focused on exposure.
| Term | Definition | Application |
|---|---|---|
| CPM | Cost Per Mille (or Cost Per Thousand) | A pricing model where advertisers pay for every 1,000 ad impressions. |
| Mille | Latin/Old French word meaning "a thousand" | Explains why CPM relates to thousands of impressions. |
| Impressions | Each time an ad is displayed on a user's screen | The primary unit of measurement for CPM, indicating ad visibility. |
| Use Case | Ideal for brand awareness and visibility campaigns | Helps evaluate the cost of reaching a broad audience. |
To learn more about various digital marketing terms and strategies, explore resources on digital marketing metrics.
