Cost per Mille (CPM)

CPM: Cost Per Mille Impressions

CPM, or Cost Per Mille Impressions, is a pricing model used in advertising where advertisers pay a specific amount for every thousand impressions of their ad. It's a common metric used to measure the cost-effectiveness of digital advertising campaigns.

Eyeballs, is pretty much what you're paying for.

How CPM Works

Advertisers bid on the CPM rate for a specific ad placement. The highest bidder wins the ad placement and pays the agreed-upon CPM rate for every 1,000 times the ad is displayed.

Factors Affecting CPM Rates

  • Ad Quality: High-quality, relevant ads tend to have lower CPM rates.

  • Target Audience: Targeting a specific demographic or interest group can influence CPM rates.

  • Ad Format: Different ad formats (e.g., display, video, native) have varying CPM rates.

  • Ad Placement: The position of the ad on a webpage or in an app can impact its CPM rate.

  • Ad Exchange: The specific ad exchange or platform used can also affect CPM rates.

  • Timing: Seasonality makes a big difference. Black Friday and Christmas are gonna be more expensive than a random week in June.

Calculating CPM

To calculate CPM, you can use the following formula:

CPM = (Total Cost of Ad Campaign / Total Impressions) x 1000

For example: If an advertiser spends $100 on an ad campaign and receives 10,000 impressions, the CPM would be:

CPM = (100 / 10,000) x 1000 = $10

CPM vs. CPC

While CPM is based on impressions, CPC (Cost Per Click) is based on clicks. CPC is often used for search engine advertising, where advertisers pay for each click on their ad. CPM rising over time can also be a good indicator of needing new creatives.

Using CPM Effectively

To maximize the effectiveness of CPM advertising, consider the following tips:

  • Target the Right Audience: Ensure your ads are shown to the most relevant audience to maximize ROI.

  • Create High-Quality Ads: Use visually appealing and engaging ad creatives.

  • Track and Analyze Performance: Monitor key metrics like click-through rates (CTR) and conversion rates to optimize your campaigns.

  • Experiment with Different Ad Formats: Test various ad formats to find the most effective ones for your target audience.

  • Set Realistic Goals: Define clear objectives for your CPM campaigns and track your progress.

By understanding CPM and its impact on advertising campaigns, you can make informed decisions and allocate your budget effectively.

Roel Timmermans - Senior Marketing Manager

Hi, I’m Roel Timmermans.


A Senior Marketing Manager with more than 15 years of experience.
I help companies step up their Marketing, E-Commerce and Branding.

Need some help improving your CPM?