What Does CPM Mean?

CPM stands for Cost Per Mille. “Mille” means one thousand, so CPM represents the cost associated with 1,000 advertising impressions.

CPM is one of the most common metrics used to express the cost of impression-based advertising. It can be used in display advertising, video advertising, programmatic advertising, social media advertising and other digital media environments.

If an advertising campaign has a CPM of $6, for example, its advertising cost works out to $6 for every 1,000 impressions at that rate.

How Do You Compute CPM?

The standard CPM calculation requires two pieces of information:

• The total advertising cost
• The total number of impressions

Once you have these two values, use the following formula:

The × 1,000 converts the cost per individual impression into a standardized cost per 1,000 impressions.

How to Compute CPM Step by Step

You can compute CPM in three simple steps.

Step 1: Find the total advertising cost

Determine how much was actually spent on the campaign during the period you are analyzing.

Step 2: Find the total impressions

Determine how many ad impressions were delivered during the same period.

Step 3: Apply the CPM formula

Divide the total cost by the total impressions and multiply the result by 1,000.

How to Compute CPM With an Example

Suppose an advertiser spends $500 on a campaign and receives 100,000 impressions.

Another CPM Calculation Example

Imagine a campaign spends $1,200 and delivers 300,000 impressions.

Therefore, the campaign’s effective CPM is $4.

CPM Calculation Examples

These examples show the same relationship at different campaign sizes: when the cost is $5 for every 1,000 impressions, the CPM remains $5 regardless of the total number of impressions.

How to Compute Campaign Cost From CPM

You can reverse the CPM formula when you know the CPM and the number of impressions but want to calculate the advertising cost.

Example

Suppose the CPM is $8 and the campaign delivers 250,000 impressions.

How to Compute Impressions From CPM

If you know the campaign cost and CPM, you can calculate the number of impressions that the campaign represents at that CPM.

Example

Suppose you have a $2,000 advertising budget and the CPM is $5.

The Three CPM Calculations to Know

CPM, total cost and impressions are connected. If you know any two of these values, you can calculate the third.

How Is CPM Different From Cost Per Impression?

CPM represents the cost for 1,000 impressions, while cost per impression represents the cost associated with a single impression.

You can also calculate cost per impression from CPM:

For example, a $5 CPM corresponds to $0.005 per impression under the same cost and impression assumptions.

Where Is CPM Used?

CPM is commonly used to express the cost of impression-based advertising across different digital advertising environments.

Does a Lower CPM Always Mean Better Performance?

Not necessarily. CPM only describes the cost associated with impressions. It does not by itself tell you whether an advertising campaign achieved its overall business objective.

Depending on the campaign goal, you may also need to examine metrics such as:

• CTR — click-through rate
• CPC — cost per click
• Conversion Rate — percentage of users who complete a desired action
• CPA — cost per acquisition or conversion
• CPL — cost per lead
• ROAS — return on advertising spend

Common Mistakes When Computing CPM

1. Forgetting to multiply by 1,000

Dividing cost by impressions gives the cost per individual impression. To calculate CPM, multiply the result by 1,000.

2. Using budget instead of actual cost

If you are calculating the CPM of a completed or partially completed campaign, make sure the cost figure corresponds to the same reporting period as the impression count.

3. Using different periods for cost and impressions

Your advertising cost and impression figures should refer to the same campaign, date range or reporting period.

4. Confusing impressions with reach

Impressions and reach are different metrics. Impressions count ad delivery events, while reach generally refers to the number of unique users or people exposed to an advertisement.

5. Comparing CPM without considering the inventory

CPM can vary depending on factors such as audience, placement, format, geography, targeting, inventory and buying environment. Comparing two CPM values without considering these differences can provide incomplete context.

How to Compute CPM: Final Answer

To compute CPM, divide the total advertising cost by the total number of impressions and multiply the result by 1,000.

If you know the CPM and impressions, you can calculate the campaign cost. If you know the cost and CPM, you can calculate the number of impressions. This means that any two of the three values are enough to determine the third.

For a quick calculation, use the CPMinsider CPM Calculator .

Frequently Asked Questions About Computing CPM