CPM - cost per mille
Cost per mille or Cost per thousand (abbreviated as CPM). In Latin mille means thousand, therefore, CPM means cost per thousand. CPM is a commonly used measurement in advertising. Radio, television, newspaper, magazine and online advertising can be purchased on the basis of what it costs to show the ad to one thousand viewers (CPM). It is used in marketing as a benchmark to calculate the relative cost of an advertising campaign or an ad message in a given medium. Rather than an absolute cost, CPM estimates the cost per 1000 views of the ad.
Calculation
An example of computing the CPM:
- Total cost for running the ad is $15,000.
- The total audience is 2,400,000 people.
- The CPM is computed as CPM = ($15,000 x 1000)/2,400,000 = $6.25
- CPM can also be calculated as CPM = $15,000/(2,400,000/1000) = $6.25
The second equation is easier for solving for unknown Cost of Unit when you know Audience and desired CPM.
Examples
- In online advertising, if a website sells banner ads for a $20 CPM, that means it costs $20 to show the banner on 1000 page views.
