Cost Per Mille (CPM), also known as cost per thousand, is a common advertising metric used to measure the cost of reaching 1,000 impressions or views of an advertisement. It is widely used in online advertising, particularly in display advertising, social media advertising, and video advertising. Here’s how CPM is calculated:
- Total Cost: Determine the total cost of the advertising campaign. This can include the amount paid to the advertising platform or publisher for displaying the ad.
- Total Impressions: Calculate the total number of impressions or views that the advertisement receives during the campaign period. An impression is counted each time the ad is displayed to a user, regardless of whether they interact with it.
- Calculate CPM: Divide the total cost of the campaign by the total number of impressions, then multiply by 1,000 to normalize the result to represent the cost per 1,000 impressions.
CPM=(Total Cost / Total Impressions)×1,000
For example, if an advertiser spent $500 on a campaign that generated 100,000 impressions, the CPM would be calculated as follows:
CPM= ($500 / 100,000)×1,000=$5
So, the Cost Per Mille (CPM) for that advertising campaign would be $5.
CPM is a useful metric for advertisers because it allows them to compare the relative cost-effectiveness of different advertising campaigns and channels. It also helps advertisers understand how efficiently they are reaching their target audience and can inform budget allocation decisions in future campaigns.
Leave a Reply