What is CPM in advertising?

CPM stands for Cost Per Mille, where 'mille' is Latin for thousand. It is a pricing model used in advertising where advertisers pay a certain amount for every thousand impressions their ad receives.

Why is calculating CPM important?

Calculating CPM is important for setting and managing advertising budgets, comparing advertising costs across different platforms or campaigns, optimising campaign performance, and understanding the return on investment (ROI) of advertising efforts.

How do you calculate CPM?

CPM can be calculated using the formula: CPM = (Total Cost of Ad Campaign / Total Number of Impressions) x 1000. This formula helps determine the cost per thousand impressions of an ad campaign.

A good CPM varies by industry, ad format, and platform. It's generally considered good if it's lower than the average for your specific industry or campaign type, as it indicates cost-effective ad spending.

How can I improve my CPM?

Improving CPM involves optimising ad campaigns for better performance. This can include targeting the right audience, creating more engaging content, and experimenting with different ad formats and platforms to find the most cost-effective approach.

What is the difference between CPM and CPC?

CPM (Cost Per Mille) charges advertisers for every thousand impressions their ad receives, regardless of user action. CPC (Cost Per Click) charges advertisers only when a user clicks on their ad, making it a more action-oriented pricing model.

CPM Calculator - Calculate Your Impression Costs

Published on March 23rd, 2023
by Lucy Greenaway

What is CPM?

CPM is an acronym for the term 'cost per mille'. Mille is the Latin word for thousand and this term is also referred to as "cost per thousand' and 'cost per impressions'.

CPM is a pricing model that is used in advertising campaigns and digital marketing where advertisers pay per thousand impressions that their ad receives.

CPM Calculator

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Number of Impressions

Your CPM is £00.00

CPM is typically used in digital marketing when an advertiser pays or bids on 'ad space' and pays for the number of ad impressions they receive.

An impression is a term used to refer to the action of an ad being displayed on a user's screen. This is counted regardless of if a user interacts with the ad in any way or not (for example the click-through rate will not be factored into the CPM model).

CPM is just one of many pricing models that are used in digital marketing. Other examples of pricing models include CPC (Cost-Per-Click), CPA (Cost-Per-Action), ROAS (Return On Ad Spend) and ROI (Return On Investment).

Why Calculate CPM?

Calculating CPM is important for many reasons.

Advertising Budgets

Working out what your total budget is can be crucial when measuring CPM as a model for your advertising campaign.

Working out the number of impressions you receive and how much you are paying for this is crucial to be able to calculate what an effective advertising budget will be for your business. By using this data you can calculate how much you will need to spend in order to achieve a specific number of impressions and adjust the campaigns as necessary.

Comparing Advertising Costs

The CPM model also allows you to make a clear comparison between different advertising costs over different platforms, ad formats, and different campaigns.

Return On Investment

Knowing the CPM is beneficial when working out the return on investment of your advertising efforts. Here you can compare the cost of the advertising to the generated revenue from the ads to determine how profitable your marketing efforts have been.

Campaign Optimisation

Online marketers can use CPM to track their advertising campaigns' performance and use it to identify areas that can be optimised for maximum performance and efficiency.

Informed Decisions

Being informed about what CPM is, how it works, and how to monitor your own CPM is beneficial when it comes to making decisions regarding your online marketing strategy.

Giving You Data To Monitor

When you regularly calculate CPM you can identify patterns and trends in your ad placement and impressions. This kind of data will allow you to identify potential seasonal trends, how many impressions you get, whether you have a good CPM or not for your business and where you can achieve a lower CPM.

How To Calculate CPM

To calculate CPM you will need to use the CPM formula. First, you will need to determine the total cost of your ad campaign and all the costs involved in creating, placing and running the ad. After this, you will need to determine the total number of impressions your ad had received (you can find this out from the network or analytics platform you use).

After you have got the total number of impressions you will need to follow the formula below.

CPM Formula

The formula to calculate CPM is:

CPM = (Total Cost Of Ad Campaign/ Total Number of Impressions) X 1000

For example, if your ad campaign cost £10,000 and received 500,000 impressions, the CPM would be:

CPM = (£10,000 / 500,000) x 1000 CPM = £20

So the CPM for this campaign would be £20 per thousand impressions.

Using A CPM Calculator

For your ease and convenience, we have created this CPM calculator to help you save time in working out your CPM and ensure that it is accurately calculated.