Cost-per-thousand impressions (CPM) is a type of media buying rate used in digital advertising. It refers to the cost of an ad measured by how many people view it – the ‘M’ in CPM stands for ‘mille,’ which is Latin for thousand. This means that advertisers pay a certain amount based on every 1,000 impressions their ad receives. One CPM means that the advertiser pays $1.00 every time their ad is viewed 1,000 times.
CPM is generally used to measure how effective an ad campaign is over a certain period of time, often expressed as Cost Per Mille (CPM). CPM calculations are helpful for businesses to understand and compare the costs associated with various marketing activities such as display ads, search engine optimization, or any other form of online marketing effort. By understanding and tracking the cost per thousand impressions an advertisement receives, businesses can accurately measure ROI (return on investment) which enables them to make informed decisions when it comes to budgeting and scaling their campaigns.
Compared to other forms of online advertising, CPM tends to be more expensive than its sister metric, cost-per-click (CPC). Unlike CPM which focuses solely on impressions without paying attention to user engagement or action taken, CPC revolves around clicks or visits from users who actually took some sort of action like clicking on an ad or visiting a website page after seeing the ad. Since CPC focuses on user engagement rather than just impressions alone, it tends to be cheaper for businesses as opposed to using CPM.
