Cost per mille, also called cost per thousand , is a commonly used measurement in advertising. It is the cost an advertiserpays for one thousand views or clicks of an advertisement. Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of exposing the ad to one thousand viewers or listeners. It is used in marketing as a benchmarkingmetric to calculate the relative cost of an advertising campaign or an ad message in a given medium. The "cost per thousand advertising impressions" metric is calculated by dividing the cost of an advertising placement by the number of impressions that it generates. CPM is useful for comparing the relative efficiency of various advertising opportunities or media and in evaluating the overall costs of advertising campaigns. For media without countable views, CPM reflects the cost per 1000 estimated views of the ad. This traditional form of measuring advertising cost can also be used in tandem with performance based models such as percentage of sale, or cost per acquisition.
Purpose
The purpose of the CPM metric is to compare the costs of advertising campaigns within and across different media. A typical advertising campaign might try to reach potential consumers in multiple locations and through various media. The cost per thousand impressions metric enables marketers to make cost comparisons between these media, both at the planning stage and during reviews of past campaigns. Marketers calculate CPM by dividing advertising campaign costs by the number of impressions that are delivered by each part of the campaign. Thus, CPM is the cost of a media campaign, relative to its success in generating impressions to see. As the impression counts are generally sizeable, marketers customarily work with the CPM impressions. Dividing by 1,000 is an industry-standard. Similarly, revenue can be expressed in terms of Revenue per mille.
Construction
To calculate CPM, marketers first state the results of a media campaign. Second, they divide that result into the relevant media cost: For example:
Total cost for running the ad is $15,000.
The total amount of impressions generated is 2,400,000.
= $0.00625
CPM is calculated as: $0.00625 x 1000 = $6.25
Note: Notice how the CPM is $6.25 and not $0.00625, this is because we are looking at cost per thousand.
In online advertising, if a website sells banner ads for a $20 CPM, that means it costs $20 to show the banner on 1000 page views.
While the Super Bowl has the highest per-spot ad cost in the United States, it also has the most television viewers annually. Consequently, its CPM may be comparable to a less expensive spot aired during standard programming.
Related metrics and concepts
Effective cost per mille
The Search Engine Marketing Professionals Organization defines eCPM as: In internet marketing, effective cost per mille is used to measure the effectiveness of a publisher's inventory being sold via a CPA, CPC, or Cost per time basis. In other words, the eCPM tells the publisher what they would have received if they sold the advertising inventory on a CPM basis. This information can be used to compare revenue across channels that may have widely varying traffic—by figuring the earnings per thousand impressions. Example
There are two banners: "Super Apps" and "Fantastic Apps".
The publishers earn $1 per click.
Both banners were published for the duration of one week.
"Super Apps" was viewed by 2000 visitors from which 10 clicked on it.
"Fantastic Apps" was viewed by 2000 visitors from which 50 clicked on it.
This shows that:
"Super Apps" has an eCPM of $5
"Fantastic Apps" has an eCPM of $25
Cost per point (CPP) or cost per rating point (CPR or CPRP)
CPP is the cost of an advertising campaign, relative to the rating points delivered. In a manner similar to CPM, cost per point measures the cost per rating point for an advertising campaign by dividing the cost of the advertising by the rating points delivered. The American Marketing Association defines cost-per-rating point as:
