Cost Per Mille (CPM) is a cost-efficiency metric used by digital marketers when measuring performance of digital campaigns. It measures the cost of showing an ad to 1,000 people. CPM is calculated by dividing the total amount spent on an advertising campaign by the number of impressions received, multiplied by 1,000.
Cost Per Mille (CPM) Formula
Cost Per Mille (CPM) = ( Advertising Spend / Number of Impressions ) x 1,000
Example
If your advertising spend is $10,000 and you receive 2,000,000 impressions, your CPM is $5.00.
| Advertising spend | $10,000 |
| Number of Impressions | 2,000,000 |
| Cost Per Mille (CPM) | $5.00 |
How to Track Cost Per Mille (CPM)?
The easiest way to track CPM across all advertising platforms, advertising channels and campaigns, is to use a measurement solution like Sellforte, which consolidates all digital data into one platform, and pre-processes the data for easy analysis (for example conducts campaign grouping). Below are examples of tracking views from the Sellforte demo.
Ad Platform-level CPM analysis:
Advertising channel -level CPM analysis:
CPM in the Media Metric funnel
CPM is a cost-efficiency metric in the Media Metric funnel. Media Metric funnel is an abstraction of consumers' buying journey:
- Impressions measure how many people saw the ad
- Clicks measure how many people clicked the ad
- Conversions measure the number of purchases made by people clicking the ad (within a certain attribution window)
- Conversion value measures the total value of purchases made by people clicking the ad (within a certain attribution window)
Cost-efficiency metrics in the funnel include: Cost Per Mille (CPM), Cost Per Click (CPC), Cost Per Conversion, Return On Ad Spend (ROAS).
Performance ratios in the funnel include: Click-Through Rate (CTR), Conversion Rate, and Average Order Value.
How is CPM used by digital marketers?
CPM is used in digital media buying, as well as in analyzing performance of digital advertising.
- ROI / Effectiveness Measurement: A digital marketers can compare CPM of different channels and campaigns to evaluate how efficient they are in driving impressions.
- Bidding parameter in CPM campaigns: CPM is often used as a bidding parameter for campaigns targeting wide reach, visibility and increased awareness for a brand. Typical ads bought with CPM-based bidding include display ads, video ads, and awareness campaigns on social media platforms. Bidding parameters in these campaigns include Max CPM and Target CPM.
- ROI deep-dive analyses: When analyzing why ROI of a channel or campaign has increased or decreased, digital marketer can analyze whether a change in CPM could be an explanatory factor for the increase / decrease.
Source of CPM data
CPM is reported to the digital marketer by the ad platform where the campaign is executed. For example, if you're running a Google Performance Max campaign, Google Ads is collecting data on impressions, spend and CPM.
Authors
Lauri Potka is the Chief Operating Officer at Sellforte, with over 15 years of experience in Marketing Mix Modeling, marketing measurement, and media spend optimization. Before joining Sellforte, he worked as a management consultant at the Boston Consulting Group, advising some of the world’s largest advertisers on data-driven marketing optimization. Follow Lauri in LinkedIn, where he is one of the leading voices in MMM and marketing measurement.