Cost per mille (CPM), also called cost ‰ and cost per thousand (CPT), is a commonly used measurement in advertising. In Latin mille means thousand, therefore, CPM means cost per thousand. Radio, television, newspaper, magazine, Out-of-home advertising and online advertising can be purchased on the basis of what it costs to show the ad to one thousand viewers (CPM). It is used in marketing as a benchmark to calculate the relative cost of an advertising campaign or an ad message in a given medium. Rather than an absolute cost, CPM estimates the cost per 1000 views of the ad.
An example of computing the CPM:
- Total cost for running the ad is $15,000.
- The total audience is 2,400,000 people.
- CPM is calculated as CPM = $15,000/(2,400,000/1000) = $6.25
Examples
- In online advertising, if a website sells banner ads for a $20 CPM, that means it costs $20 to show the banner on 1000 page views.
- While the Super Bowl has the highest per-spot ad cost in the United States, it also has the most television viewers annually. Consequently, its CPM may be comparable to a less expensive spot aired during standard programming. (But the truth is that Super Bowl prices have been as much as double a regular prime-time ad, because advertisers are willing to pay to be part of 'the event' that is the Super Bowl broadcast.)
Effective cost per mille
Effective cost per mille (eCPM) is used to measure the effectiveness of a publisher's inventory being sold (by the publisher) via a CPA, CPC, or CPT basis. In other words, the eCPM tells the publisher what they would have received if they sold the advertising inventory on a CPM basis (instead of a CPA, CPC, or CPT basis).
See also
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