In online advertising, CPM is a metric that refers to the cost of showing an advertisement to 1,000 users. CPM stands for cost per mille where the letter "M" signifies "mille," a Latin term that means "thousands." It is often used as a benchmark to compare the cost-effectiveness of marketing campaigns and to calibrate advertising budgets.
The CPM formula is as follows:
CPM = (Cost of the ad campaign / Total impressions) x 1,000
For example, let's say a company paid $10,000 for an online ad campaign that received 500,000 impressions. The CPM would be calculated as:
CPM = ($10,000 / 500,000) x 1,000
CPM = $20
So the cost per thousand impressions (CPM) for this ad campaign would be $20.
To use Publift’s CPM calculator, follow these simple steps:
CPM can vary based on the platform, industry, ad format, targeting options, and other factors. For example, the average CPM for Instagram ads is around $10.41, while the average CPM for Facebook ads in the US is around $11.32.
To arrive at a reasonable CPM pricing model, it's necessary to analyze previous campaigns, compare results with market averages, and assess how CPM affects return on investment (ROI). Ultimately, what's considered a good CPM rate will depend on your specific goals, budget, and the performance metrics you're tracking.
If you’re interested in partnering with ad networks that have a track record of delivering industry-leading CPMs within their respective niches, have a look at our curated list of the best high CPM ad networks for publishers.
CPM is important in digital advertising because it allows advertisers to plan their ad spend, strategize their marketing campaign, and manage the advertising budget more efficiently. It's also a useful metric for publishers who can use it to determine the value of their ad inventory and set competitive pricing. Publishers often have a target CPM that they aim to achieve and it is typically influenced by factors such as their audience demographics, the type of content,etc.
Here are some factors that can affect your CPM rate:
The difference between CPM and eCPM is that where CPM is an advertiser-centric metric, eCPM is a publisher metric. CPM measures the cost of 1,000 ad impressions to an advertiser, whereas eCPM measures the revenue generated for a publisher by 1,000 ad impressions.
Programmatic advertising is the process of automatically buying and selling digital advertising space. It’s a smarter, faster alternative to manual advertising.
What are CPM, CPC, CPL, CPA, CPV and CPI? Understanding these key marketing metrics is key to making the right choice for your website. Watch Tobin break down each acronym and their meanings for you.
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Programmatic Advertising Jargon GlossaryNavigating ad tech’s acronyms, terminology and jargon can be a challenge. Here are a few definitions of common terms and metrics. You can also check out our extended Ad Tech Jargon Glossary.
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