Cost Per Mille (CPM)
The cost an advertiser pays per one thousand impressions of their ad, used as a standard pricing model in display and programmatic advertising.
Definition
Cost Per Mille, commonly abbreviated as CPM, represents the price an advertiser pays for every one thousand times their advertisement is displayed to viewers. The term originates from the Latin word "mille" meaning thousand. CPM is one of the most widely used pricing models in digital advertising, particularly for display ads, video ads, and programmatic campaigns.
CPM is calculated by dividing the total cost of an advertising campaign by the number of impressions, then multiplying by one thousand. For instance, if a campaign costs $500 and generates 200,000 impressions, the CPM would be $2.50.
Why It Matters
Understanding CPM is essential for comparing advertising costs across different platforms and channels. It provides a standardized metric that allows marketers to evaluate whether their ad spend is efficient relative to the audience size being reached.
CPM-based campaigns are particularly valuable for brand awareness objectives where the goal is maximum exposure rather than direct response actions like clicks or purchases.
Examples in Practice
A luxury fashion brand runs a display campaign on premium lifestyle publications with a CPM of $12, prioritizing placement quality over volume. The higher CPM reflects the desirable audience demographics.
A tech startup launches a YouTube pre-roll campaign with a $6 CPM, reaching 500,000 viewers for $3,000. They compare this against their Instagram CPM of $8 to allocate future budget.
A media buyer negotiates a $4 CPM for programmatic display ads across a network of news sites, securing broad reach at an efficient cost during a product launch window.