What Is Cost Per Thousand (CPM)?
Cost per thousand (CPM), also called cost per mille, is a marketing term used to denote the price of 1,000 advertisement impressions on one web page. If a website publisher charges $2.00 CPM, that means an advertiser must pay $2.00 for every 1,000 impressions of its ad. The “M” in CPM represents the word “mille,” which is Latin for “thousands.”
Understanding Cost Per Thousand (CPM)
Cost per thousand (CPM) is the most common method for pricing web ads in digital marketing. The method relies on impressions, which is a metric that counts the number of digital views or engagements for a particular advertisement. Impressions are also known as “ad views.” Advertisers pay website owners a set fee for every thousand impressions of an ad. While an impression measures how many times an ad was displayed on a site, it does not measure whether an ad was clicked on.
The click-through rate (CTR) measures whether an ad was clicked on, representing the percentage of people who saw the ad and clicked on it. Advertisers frequently measure the success of a CPM campaign by its CTR, For example, an advertisement that receives two clicks for every 100 impressions has a 2% CTR. You cannot measure an advertisement’s success by CTR alone because an ad that a reader views but does not click may still have an impact.
How does CPM work?
CPM is a very traditional online marketing metric in which companies pay for views of their advertisement. It’s primarily used in advertising media selection, marketing as related to web traffic, and online advertising. One great example that many companies might be familiar with is Google Ads. This platform works on a CPM and a CPC basis.
Because an impression is such a small thing, these numbers are typically measured in thousands or more. Unlike a cost per click model, a cost per thousand impressions model measures a very high-level awareness of a company.
How is the cost per thousand impressions measured? The typical formula is:
Cost per impression = Advertising cost / 1000 Impressions
This is CPM. All strategies, methods, and campaigns that are built around this metric are CPM. The best results from this equation are found with digital marketers who have leveraged this into success for other companies and themselves.