CPM (cost per thousand impressions)

The formula

• CPM = 1,000 · K / I

K is the advertising cost and I the number of impressions, the times the ad was shown. The M is the Roman numeral for a thousand: the price is quoted per thousand views, so the plain division is scaled up by 1,000.

A worked example

A campaign costs 5,000 and the ad is shown 400,000 times: CPM = 1,000 · 5,000 / 400,000 = 12.50. The same money over 100,000 impressions would be a CPM of 50.

The thousand is the thing to keep track of

A network quotes a CPM, a budget is in money and the report counts impressions, so the three meet in every calculation. Multiplying CPM by impressions gives a cost a thousand times too large unless the product is divided by 1,000: at a CPM of 12.50, 400,000 impressions cost 12.50 · 400 = 5,000, not 5,000,000. The card above keeps the factor where it belongs whichever quantity you solve for.

From a budget to a reach

Turned round, the formula says how many impressions a budget buys: I = 1,000 · K / CPM. A budget of 2,000 at a CPM of 8 buys 1,000 · 2,000 / 8 = 250,000 impressions.

CPM, CPC and CPA

CPM prices a view, CPC a click and CPA a purchase or a sign-up. The click-through rate links the first two: at a CPM of 12.50 and a CTR of 2.5%, a thousand impressions give 25 clicks, so each click costs 12.50 / 25 = 0.50.

Common mistakes

• Dropping the 1,000. Cost divided by impressions is the cost of one impression, a thousand times smaller than the CPM.
• Reading CPM as a result. A low CPM says the views were cheap. It says nothing about whether anyone clicked or bought.
• Mixing periods. The cost and the impressions have to cover the same campaign and the same dates.

Frequently asked questions