How to Figure Out Cost Per Thousand (CPM)

Cost per thousand, commonly called CPM, tells you how much it costs to deliver 1,000 advertising impressions. It is one of the most commonly used metrics for comparing the cost of impression-based advertising campaigns.

If you know the total advertising cost and the number of impressions, you can figure out cost per thousand using a simple formula.

What Does Cost Per Thousand Mean?

Cost per thousand refers to the cost associated with 1,000 impressions. In digital advertising, it is usually expressed as CPM, which stands for Cost Per Mille.

“Mille” means one thousand. Therefore, CPM is simply a standardized way to express advertising cost for every 1,000 impressions.

For example, a $5 CPM means the effective cost is $5 for every 1,000 impressions.

How to Figure Out Cost Per Thousand

You only need two numbers to calculate cost per thousand:

• Total advertising cost
• Total number of impressions

Once you have these values, use the following formula:

Let’s go through the calculation step by step.

Step 1: Find the total advertising cost

Start by identifying how much was spent on the advertising campaign. Suppose the total campaign cost was $600.

Step 2: Find the total impressions

Next, determine how many impressions the campaign delivered. Suppose the campaign generated 120,000 impressions.

Step 3: Apply the formula

First divide the cost by impressions:

Then multiply by 1,000:

Cost Per Thousand Example

Consider another advertising campaign that costs $2,000 and delivers 500,000 impressions.

Therefore, the campaign’s cost per thousand impressions is $4.

Cost Per Thousand Formula

The standard cost per thousand formula is:

Where:

• CPM = cost per 1,000 impressions
• Total Cost = total amount spent on advertising
• Total Impressions = total number of ad impressions

The × 1,000 part of the formula converts the cost per individual impression into the cost per 1,000 impressions.

Why Do You Multiply by 1,000?

The purpose of CPM is to make advertising costs easier to compare using a standard unit of 1,000 impressions.

Suppose a campaign costs $100 and produces 25,000 impressions. Dividing the cost by impressions gives the cost of one impression:

Multiplying by 1,000 converts this into the cost for 1,000 impressions:

This makes it easier to compare campaigns with different impression volumes.

How to Figure Out Cost Per Thousand From Advertising Spend

If you are working with an advertising report, the process is simple. Find the total spend and total impressions for the same reporting period, then apply the CPM formula.

Although the campaign sizes are different, each example has the same cost per thousand because the ratio between cost and impressions remains the same.

How to Calculate Total Cost From Cost Per Thousand

You can also use CPM in reverse. If you know the CPM and the expected number of impressions, you can calculate the total advertising cost.

How to Calculate Impressions From Cost Per Thousand

If you know the total budget and CPM, you can estimate how many impressions the budget can purchase.

The Three Ways to Use the CPM Formula

The CPM relationship can be used to calculate any one of three values when the other two are known.

How to Figure Out Cost Per Thousand Online

If you don’t want to calculate CPM manually, you can use the free CPM calculator from CPMinsider .

The calculator allows you to enter any two of these three values:

• Total advertising cost
• CPM
• Total impressions

It then calculates the missing value for you.

What Is a Good Cost Per Thousand?

There is no single CPM that is considered good for every advertising campaign. CPM can vary based on factors such as audience, geography, device, ad format, inventory quality, seasonality, targeting, and advertiser demand.

Instead of evaluating CPM in isolation, advertisers can compare it with other campaigns that have similar audiences, inventory, objectives, and time periods.

Cost Per Thousand for Digital Advertising

CPM is widely used in digital advertising because many advertising transactions are based on impressions.

You may encounter CPM when working with:

• Display advertising
• Programmatic advertising
• Video advertising
• Publisher advertising inventory
• Social media advertising
• Brand awareness campaigns
• Media planning and forecasting

The basic calculation remains the same:

Common Mistakes When Calculating Cost Per Thousand

1. Forgetting the × 1,000

Dividing cost by impressions without multiplying by 1,000 gives the cost of a single impression, not the cost per thousand impressions.

2. Using inconsistent data

Make sure the advertising cost and impression count come from the same campaign and reporting period.

3. Mixing currencies

When comparing CPM values, use a consistent currency. A CPM in USD should not be directly compared with a CPM in INR without accounting for the currency difference.

4. Confusing CPM with CPC

CPM measures cost per 1,000 impressions, while CPC measures cost per click. They are different metrics and should not be calculated using the same formula.

5. Using estimated impressions as actual impressions

When calculating the actual CPM of a completed campaign, use the appropriate reported impression count rather than a forecast unless you are specifically calculating an estimated CPM.

Cost Per Thousand vs. Cost Per Impression

Cost per thousand and cost per impression describe the same underlying advertising cost at different scales.

To convert CPM into cost per individual impression, divide CPM by 1,000.

Frequently Asked Questions

Final Takeaway

Figuring out cost per thousand is simple once you know the total advertising cost and the number of impressions.

For example, if you spend $600 and receive 120,000 impressions, your cost per thousand is $5.

For quick calculations, use the free CPM calculator to calculate CPM, advertising cost, or impressions.