What is CPM?

CPM is an advertising term that stands for Cost Per Mille (thousand impressions). It’s also a payment model that denotes advertisers paying a set cost per thousand impressions. Unlike other payment models that charge for actions like clicks, CPM is calculated on the basis of views.

Even though it’s primarily an online marketing metric, it’s also used as a benchmarking metric in radio, television, newspaper and other forms of advertising to calculate the cost of a campaign.

CPM is one of the most common web ads payment models. When advertisers want to assess the success of their campaign, they also monitor CTR (click-through rate) to compare how many people viewed the ad and how many clicked on it. If only CTR was measured, it wouldn’t properly measure the impact of a campaign as viewers may still be influenced by viewing the ad.

CPM is best used for brand awareness campaigns, as it amplifies a company’s brand or a specific message. If viewers aren’t required by the campaign objectives to take actions, CPM is a good choice for advertisers.

It’s important to denote that if the ad is placed on two locations on the same page, advertise are paying for two impressions instead of just one.

The formula for CPM is

CPM = CPM rate x CPM units