Definition
Cost per thousand impressions (technically, “cost per mille”).
Information
The CPM model refers to advertising bought on the basis of impression. This is in contrast to the various types of pay-for-performance advertising, whereby payment is only triggered by a mutually agreed upon activity (i.e. click-through, lead, sale).
The total price paid in a CPM deal is calculated by multiplying the CPM rate by the number of CPM units. For example, one million impressions at $10 CPM equals a $10,000 total price.
1,000,000 / 1,000 impressions = 1,000 units
1,000 units X $10 CPM = $10,000 total price
FAQ
How do CPM ads compete with CPM ads?
CPC bids are effectively converted to CPM bids. To make an apples-to-apples comparison, Google et all estimate how many clicks a CPC ad is likely to receive per 1,000 impressions, and use the CPC and CTR to calculate an equivalent CPM.
Formula: CPC bid x CTR estimate x 1,000 = effective CPM
Example: $2 x (1% x 1,000) = $20 effective CPM
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Related Terms
eCPM, click-through rate (CTR), cost-per-action (CPA), cost-per-click (CPC)
view all terms in the Online Advertising glossary or all terms in the Digital Marketing glossary
