What Does Cost per mille (CPM) mean? [+ How to Calculate]

What Does Cost per mille (CPM) Mean?

Cost per mille (CPM) is a pricing model used in digital advertising where advertisers pay for every 1,000 impressions of their ad. The term “mille” is Latin for “thousand,” so CPM directly translates to the cost per thousand views of an ad. In this context, an "impression" is counted every time an ad is displayed on a webpage, app, or digital platform, regardless of whether the user interacts with it.

CPM is particularly useful for brand awareness campaigns, where the goal is to reach a broad audience and increase visibility rather than drive direct actions like clicks or conversions. This model is commonly used in programmatic advertising, which automates the buying and selling of ad space to ensure your message reaches the right audience.

For example, if you’re launching a new product and want to maximize exposure within a specific niche, CPM ensures your ads are seen by as many relevant users as possible.

How to Calculate Cost per mille (CPM)

Calculating CPM is straightforward. The formula is:

CPM = (Total Campaign Spend ÷ Number of Impressions) × 1,000

This formula tells you how much you’re paying for every 1,000 views of your ad. For instance, if you spend $1,500 on a campaign that receives 750,000 impressions, your CPM would be calculated as follows:

$1,500 ÷ 750,000 × 1,000 = $2 per 1,000 impressions.