CPM (Cost Per Mille, cost per thousand impressions) — is the average price for 1 000 ad impressions.
Unlike CPC, impressions are counted here rather than clicks. A user may see the ad and take no action, but the impression will still be included in the statistics.
CPM is often used to evaluate traffic costs across different GEOs, audiences, and placements. It shows how much the advertising system charges for access to the selected audience.
How to calculate CPM
Formula:
CPM = Advertising expenses / Number of impressions × 1 000
For example, $500 was spent on advertising and generated 200 000 impressions:
$500 / 200 000 × 1 000 = $2,50
The CPM was $2,50. This means that every thousand impressions cost the advertiser an average of $2,50.
What CPM depends on
The cost per thousand impressions can vary significantly depending on the launch conditions. It is affected by:
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GEO;
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competition for the audience;
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the advertising topic;
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seasonality;
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placements and formats;
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the selected audience;
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the situation in the advertising auction.
For example, before major sales or holidays, the number of advertisers increases, competition for impressions rises, and CPM may increase along with it.
What CPM shows a media buyer
A high CPM means that impressions cost more. But this does not mean that the campaign is unprofitable.
Suppose one audience has a CPM of $5, while another has a CPM of — $10. The second costs twice as much in terms of impressions, but it may generate more clicks and convert better. As a result, the higher CPM may be offset by good CTR, CPC, and CPA.
Therefore, there is no point in lowering CPM at any cost. For a media buyer, what matters more is what these impressions turn into next: clicks, leads, purchases, or other required actions.
Important: the word mille in the name means «thousand». Therefore, CPM is calculated specifically per 1 000 impressions.
