What is CPM?

CPM is a measurement (a number) that indicates what it costs to advertise using a particular medium.  It is widely used for benchmarking advertising rates for television, radio, the internet, or any other type of advertising.

What does CPM stand for?

The acronym CPM actually stands for Cost Per Mille, which is derived from the Latin word mille - which means thousand.

Why is CPM important?

CPM is an important benchmark to determine the cost and quality of advertising.  Typically highly-targeted messages and mediums will have a high CPM while those with a lower CPM tend to be less targeted and more of a shotgun approach at delivering a message.

It does help you to judge the cost effectiveness of different advertising mediums (assuming all things being equal).

How do you calculate CPM?

To calculate CPM you take the total cost of the advertisement and divide it by the number of impressions:

CPM Sample Calculation

Say you wanted to run a banner ad on a site and that the banner ad costs $100 for a month and you know that the website receives 2,000 visitors per day.  With these two pieces of information, you can then calculate the CPM for this particular advertisement:

What is a good or bad CPM?

Since there are a multitude of external factors that influence whether a CPM is good or bad (quality of the medium, demographics, etc.) advertisers will want the lowest CPM possible while publishers are always trying to get the highest CPM possible.

CPM rates vary from as low as under $0.01 to the hundreds of dollars depending on the factors I just mentioned.

Resources & Tools

• CPM Calculator – Clickz

External Links

• Cost Per Mille – Wikipedia

Related posts:

1. 7 Ways to Lower Your PPC Costs