Cost Per Mille (CPM), also known as Cost Per Thousand, is a metric used in digital advertising to measure the cost incurred by advertisers for every 1,000 impressions of their advertisements. CPM represents the total cost of advertising divided by the number of impressions generated within a specific time period. 

CPM is commonly used in various digital advertising channels, including display advertising, programmatic advertising, and video advertising. It helps advertisers assess the cost efficiency of their campaigns in terms of reach and impressions. 

The term “Mille” refers to the Latin word for “thousand,” and CPM is calculated based on the cost per thousand impressions. 

The formula 

CPM = Total Cost / (Total Impressions / 1,000) 

Some key components 

  • Total Cost: This refers to the total amount spent on advertising within a specific time period. It includes costs such as ad spend, media buying fees, creative production costs, and any other associated expenses. 
  • Total Impressions: This represents the total number of times an ad is shown to users within the same time period. An impression is counted each time an ad is displayed on a user’s screen, regardless of whether the user interacts with the ad. 

By dividing the total cost by the number of impressions and then multiplying by 1,000, we obtain the Cost Per Mille. 

For example, if an advertising campaign costs $1,500 and generates 500,000 impressions, the Cost Per Mille would be calculated as follows: 

CPM = $1,500 / (500,000 / 1,000) = $3 

In this case, the Cost Per Mille would be $3, indicating that it costs $3 for every 1,000 impressions. 

CPM is a widely used metric in display advertising and serves as a benchmark for comparing the cost efficiency of different advertising campaigns or platforms. Advertisers can use CPM to evaluate the cost-effectiveness of reaching a specific target audience and compare it to other advertising channels or strategies. 

It’s important to note that CPM focuses on the cost of impressions rather than the performance or engagement of the ads. While CPM provides insights into the cost of reaching a specific number of users, it does not directly reflect the effectiveness of the advertising campaign in terms of clicks, conversions, or other desired actions. 

To optimize and improve CPM, advertisers can employ various strategies and tactics, such as refining audience targeting, optimizing ad creatives for better engagement, selecting placements and ad formats with higher performance, utilizing programmatic advertising technologies, and continuously monitoring and optimizing campaign performance. 

In summary, Cost Per Mille (CPM) is a metric that measures the cost incurred by advertisers for every 1,000 impressions of their ads. It helps assess the cost efficiency of digital advertising campaigns in terms of reach and impressions. CPM is widely used in display advertising and serves as a benchmark for comparing the cost effectiveness of different campaigns or platforms. Advertisers can optimize CPM by refining audience targeting, optimizing ad creatives, selecting high-performance placements and formats, and continuously monitoring and optimizing campaign performance.