CPM, or Cost Per Thousand Impressions, is a digital advertising metric that calculates the cost an advertiser pays for one thousand views or impressions of their advertisement.
What does CPM mean?
Cost Per Thousand Impressions (CPM) is a widely used pricing model in digital advertising where advertisers pay a fixed amount for every 1,000 impressions their ad receives. This model focuses on the visibility of an advertisement, charging advertisers based on how many times the ad is shown, regardless of whether it is clicked on or not.
CPM is particularly useful for brand awareness and visibility campaigns, where the primary goal is to maximise the exposure of an ad to a relevant audience. By measuring the cost in terms of impressions, CPM allows advertisers to budget effectively for the scale of exposure they desire, making it a fundamental metric for campaigns aimed at increasing brand presence and recall in the digital space.
| Abbreviation | Meaning | Using by | Year coined |
| CPM | Cost per Mille | Advertisers/Analysts | Mid to late 1990’s |
Examples of a cost per mille or thousand
Example 1:
A beverage company launches a new product and decides to promote it through digital billboards on a popular website frequented by their target demographic. The website charges a CPM rate of $5. This means for every thousand times the digital billboard is displayed (impressions) to website visitors, the beverage company pays $5. If the ad accumulates 100,000 impressions in a month, the total cost to the company would be $500. This CPM model helps the company ensure their new product gains visibility among potential customers.
Example 2:
A fashion brand wants to increase awareness of its latest clothing line by placing banner ads on an online fashion magazine. The magazine’s advertising rate is set at a CPM of $10. If the fashion brand’s banner ad is displayed 50,000 times to readers throughout the month, the fashion brand will pay a total of $500 for those impressions. This approach allows the brand to strategically increase its exposure to an audience interested in fashion, leveraging the CPM model to manage its advertising budget based on the scale of exposure.
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