Cost Per Thousand (CPM): An Overview
What is CPM?
Cost per thousand (CPM), is a way of measuring and pricing advertisements. The acronyms are derived from the latin version of the phrase “cost per mille” where “mille” in English means “thousand.”
How to calculate CPM
To determine a CPM, you need to take the total amount being spent and divide that by the number of impressions a particular ad receives.
CPM Calculation
Ad Cost / Impressions = CPM
Example of a CPM calculation for a campaign
$100 banner ad / 60,000 impressions = $1.66 CPM
Note: Notice how the CPM is $1.66 and not .0166, this is because we are looking at cost per thousand.
Why is CPM important?
CPM is a gauge at determining the cost of advertising. It is a good indicator to test against nearly every type of advertising medium (radio, internet, print, television) because all other things being equal, it allows you to effectively judge the cost effectiveness of a medium, campaign, or advertisement.
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