Basics · also called CPM, cost per thousand, cost per mille
CPM (cost per mille)
CPM (cost per mille) is the price an advertiser pays for one thousand ad impressions; "mille" is Latin for thousand.
CPM is the most common price tag in advertising. Instead of pricing each individual ad showing (which would be fractions of a cent), the industry quotes the price for a thousand of them. A US$5 CPM means US$5 buys 1,000 impressions, so each one costs half a cent.
The formula is simple: CPM = (cost ÷ impressions) × 1,000. It works in reverse too: cost = impressions × CPM ÷ 1,000. Publishers talk about the CPM they receive, while buyers talk about the CPM they pay; the gap between the two is the ad tech tax taken by intermediaries.
CPMs vary enormously by audience, format and channel. Video and CTV usually carry much higher CPMs than standard banners, and CPMs typically rise in the fourth quarter as holiday demand peaks. Variants include vCPM (per thousand viewable impressions) and eCPM, which converts any pricing model into a comparable CPM. A low CPM is not automatically good value: cheap impressions are often low-quality, non-viewable or invalid.
Think of it like this
CPM is like buying eggs by the tray instead of one at a time: nobody quotes the price of a single egg, but everybody knows what a tray of thirty costs.
An example
A campaign buys 4,000,000 impressions for US$10,000. CPM = 10,000 ÷ 4,000,000 × 1,000 = US$2.50. If only 50% were viewable, the effective viewable CPM is US$5.00.
Related terms
Impression
An impression is one instance of an ad being served and counted as displayed to a user; it is the basic unit that most online advertising is bought and sold by.
eCPM (effective CPM)
eCPM (effective CPM) is the revenue or cost per thousand impressions calculated after the fact, which lets you compare ads sold on CPM, CPC, CPA or other models.
CPC (cost per click)
CPC (cost per click) is a pricing model where the advertiser pays only when someone clicks the ad, and also the average amount paid per click.
CPV (cost per view)
CPV (cost per view) is a video ad pricing model where the advertiser pays each time the video counts as viewed, according to the platform's definition of a view.
Floor price (reserve price)
A floor price is the minimum bid a publisher will accept for an impression; bids below the floor are rejected, even if they are the highest bid in the auction.