Cost Per Mille (CPM) is an advertising pricing model where advertisers pay a set fee for every one thousand impressions an advertisement receives.
Cost Per Mille, often abbreviated as CPM, is a standard metric in digital advertising that represents the price an advertiser pays for one thousand views or impressions of an ad. The 'Mille' in the name is derived from the Latin word for 'thousand'. This model is one of the most common methods for pricing web ads. The calculation for CPM is straightforward: Total Cost of the Campaign divided by the Total Number of Impressions, multiplied by 1,000. For example, if an advertiser spends $200 for an ad campaign that results in 50,000 impressions, the CPM would be ($200 / 50,000) * 1000 = $4.00. CPM-based pricing is typically used for campaigns where the primary goal is brand awareness, visibility, and reach, rather than driving immediate actions like clicks or sales. It is prevalent in display advertising, video ads, and social media campaigns designed to expose a brand to a broad audience.
CPM is a fundamental metric for media planning and budget allocation, as it provides a standardized way to compare the cost-efficiency of advertising space across different websites, platforms, and media types. It helps advertisers understand how much they are paying to get their message in front of potential customers. By monitoring CPM, marketers can assess the relative value of different ad placements and optimize their ad spend towards channels that offer the most cost-effective exposure to their target audience. It is an essential key performance indicator (KPI) for evaluating the success of brand awareness campaigns and forecasting advertising costs.
