CPM stands for “Cost Per Mille” (Latin for “cost per thousand”), representing the price an advertiser pays for 1,000 impressions of an ad. It’s one of the most fundamental metrics in digital advertising.
Key Facts About CPM
1. The CPM Formula
CPM = (Total Ad Spend ÷ Total Impressions) × 1,000
Example: If you spend 50for25,000impressions:(50 ÷ 25,000) × 1,000 = $2 CPM
2. CPM vs. Other Pricing Models
| Metric | What It Measures | Best For |
|---|---|---|
| CPM | Cost per 1,000 impressions | Brand awareness |
| CPC (Cost Per Click) | Cost per click | Traffic generation |
| CPA (Cost Per Action) | Cost per conversion | Performance marketing |
3. Typical CPM Rates (2024)
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Facebook/Instagram: 5−15
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Google Display Ads: 2−10
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YouTube: 10−30
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Programmatic Display: 0.50−5
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Connected TV (CTV): 20−50
4. What Factors Affect CPM?
✔ Ad format (video CPM > display CPM)
✔ Targeting (narrow audiences = higher CPM)
✔ Seasonality (Q4 holidays increase CPMs)
✔ Industry competition (legal/finance have high CPMs)
✔ Ad quality (better creatives often get lower CPMs)
Why CPM Matters in Advertising
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Budget Planning: Helps forecast how far your budget will reach
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Campaign Comparison: Standardizes costs across different channels
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Performance Benchmark: Identifies overpriced inventory
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Strategy Decisions: Guides when to optimize for impressions vs. clicks
Pro Tip: While CPM measures efficiency in reaching audiences, always analyze it alongside CTR (Click-Through Rate) and conversion rates for complete performance insights.