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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 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.
The CPM is computed as CPM = ($15,000 x 1000)/2,400,000 = $6.25
CPM can also be calculated as CPM = $15,000/(2,400,000/1000) = $6.25
The second equation is easier for solving for unknown Cost of Unit when you know Audience and desired CPM.
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). |
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