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Cost Per Mille (CPM)

Metric
Cost

Definition

How much you pay for one thousand ad impressions.

Related Knowledge

Cost Per Click (CPC)Customer Acquisition Cost (CAC)

"Mille" is Latin for thousand.

CPM=(Total Ad SpendImpressions)×1,000CPM = \left(\frac{\text{Total Ad Spend}}{\text{Impressions}}\right) \times 1{,}000

When CPM Pricing Makes Sense

CPM is a natural fit when visibility matters more than immediate clicks.

Typical use cases:

  • Brand awareness campaigns
  • Display advertising and banner ads
  • Video pre-roll and YouTube style placements
  • Programmatic campaigns focused on reach and frequency

    • In these cases, you are paying for eyeballs, not actions.

    CPM can also work very well when your creative has a strong click-through rate (CTR):

  • Suppose you pay $5 CPM.
  • Your ad gets 2% CTR.

    • Then your effective CPC is:

  • $5 / 1{,}000 impressions × 2% CTR = $0.10 per click
  • That can be cheaper than buying clicks directly on a CPC basis.

    • CPM vs. CPC Trade-offs

  • CPM (Cost Per Mille)
    • You take on more performance risk.
    • If ads do not resonate and nobody clicks, you still pay for the impressions.
    • Usually cheaper on a per-impression basis because you accept that risk.
  • CPC (Cost Per Click)
    • You pay only when someone actually clicks.
    • The platform takes on more risk, since it earns nothing from impressions that do not get clicks.

    • Choosing between them depends on whether your goal is reach, engagement, or conversions.

    What Affects CPM

    Several factors drive CPM up or down:

  • Audience targeting
    • Broad audiences tend to be cheaper.
    • Narrow, premium audiences are expensive. For example:
      • "CFOs at 500+ employee fintech companies" → high CPM due to scarce, competitive inventory.
  • Placement quality
    • Prime inventory (homepage takeovers, in-stream video, top-of-feed) costs more.
    • Lower-quality or remnant placements are cheaper.
  • Seasonality
    • Q4 and major shopping periods usually see higher CPMs as more advertisers compete.
  • Ad format
    • Video and rich media often cost more per impression than simple static banners.

    • eCPM (Effective CPM)

    eCPM lets you compare campaigns even if they use different pricing models (CPC, CPA, etc.).

    Example:

  • You run a CPC campaign.
  • Spend = $100.
  • Impressions = 40,000.

    • Then:

    eCPM=(10040,000)×1,000=$2.50eCPM = \left(\frac{100}{40{,}000}\right) \times 1{,}000 = \$2.50

    Now you can compare this $2.50 eCPM directly against campaigns that were bought on a CPM basis and judge which buys impressions more efficiently.