Cost per mille (CPM) (2024)

• Glossary

What is Cost Per Mille?

Cost per mille (CPM) is a pricing model used in digital advertising, where advertisers pay the publisher a fixed price for 1,000 impressions of their ad — “mille” being Latin for “thousand”. An impression is achieved when an ad loads on the page or app and is viewed by the user.

This is the most commonly used model in the programmatic advertising ecosystem, where advertisers automatically buy ad space to connect them with their ideal audience. CPM generates broad reach for advertisers and predictable revenue for publishers (app or website owners).

Why is CPM important?

CPM is an important metric for advertisers looking to increase brand awareness, because it prioritizes exposure (impressions) over clicks or other engagements.It’s particularly useful if you’re trying to build recognition with a niche audience. For example, let’s say you want to promote your new vegan, gluten-free granola to health-conscious customers. Serving your ads on an organic market site, such as Whole Foods, gives you plenty of eyeballs on your brand and a “coolness by association” factor.

How do you calculate CPM?

To calculate your cost per mille, first take your total campaign spend and divide it by the number of impressions. That gives you the cost of one impression. Multiply that by 1,000 to find the cost of 1,000 impressions.

For example, if you paid a publisher $1,500 to serve your ad and that ad received 750,000 impressions, you paid $2 for every 1,000 impressions.

CPM is also relevant for publishers, who use it to offer their inventory based on the number of potential impressions an ad receives. Let’s say you offer 250,000 impressions — divide that by 1,000 (250), and then multiply it by the CPM. For this scenario, let’s call it $5.00.

This lets you know how much an ad can potentially earn you. In this example, as the publisher, you’d earn $1,250 for 250,000 impressions.

What is an average CPM rate?

CPM rates vary greatly depending on platform, location, industry, and external trends. So, rather than worrying about average rates, it’s more important to understand the value of where your impressions are served.

Take social media platforms, for example. You can see from the infographic below that Meta (which owns Facebook and Instagram) charges more than $7 for 1,000 impressions — while on X (formerly Twitter), you’d pay just $1.20. TikTok and YouTube fall somewhere in between.

But it’s not just about finding the lowest CPM. If your ideal users are on Instagram, it’s worthwhile for you to advertise there: you might pay more, but you’ll achieve higher ROAS than you would on X.

Now take a look at the average CPMs for social media advertising over the past couple of years. In the fourth quarter of 2024, advertisers were paying around $6 for 1,000 impressions. This chart illustrates the impact of seasonal trends — costs typically spike in Q4 as brands scramble to get noticed ahead of the holiday season.

So, while it’s important to keep on top of these trends, your main focus should be on where and when your impressions are served.

Benefits of using CPM (and challenges)

Using CPM as a pricing model has a number of benefits for advertisers and publishers.

Benefit #1: Broad reach

As mentioned earlier, CPM is all about exposure. Buying thousands of impressions will get you noticed and raise brand awareness, even if not everyone who views your ad is ready to purchase right now.

Benefit #2: Clear pricing

CPM pricing is transparent: advertisers pay the publisher a fixed price for a set number of impressions, making it easy for both parties to keep track of costs and revenues. Costs also tend to be lower than for other monetization models, since there’s less obvious impact on sales.

Benefit #3: Easy optimization

The simple pricing structure of CPM makes it easy to compare channels or media sources based on your budget. And once you’ve achieved the agreed number of impressions, you’re free to try something else.

For deeper insights, look at CPM in conjunction with other metrics focused on engagement or conversions. This will show you which of your impressions are connecting most effectively with users, so you can allocate more budget there and also test different creatives.

Benefit #4: Scalability

All of the above means CPM is easily scalable. The simple pricing means advertisers can easily add more impressions to increase visibility, or scale back when budgets are tighter. Likewise, publishers can set their prices to reflect the value of each impression.

Challenges of CPM

The obvious limitation of CPM is that impressions may not lead to conversions. You could be showing your ad to entirely the wrong people, but if you’re not measuring engagements (like click-throughs and conversions), you’ll never know.

It can also be challenging to attribute actions directly to a specific ad. If someone sees your app in their Instagram feed and keeps on scrolling, but then remembers and downloads it a few days later, how can you prove there’s a link?

Finally, fraud can be an issue. Bots can artificially increase the number of impressions of an ad, meaning advertisers pay for views that never really happened. Check what protections are in place on your chosen platforms.

How does CPM compare to other advertising metrics?

As we’ve seen, CPM is a useful pricing model when you want high exposure at a fixed cost. But there are other models and metrics in the programmatic ecosystem – let’s see how they compare.

CPM vs eCPM

These terms are often confused, and they do sound very similar: eCPM stands for effective cost per mille. The key thing to remember is that eCPM is a metric used by publishers.

Let’s say a mobile app’s ad earned $175 per day and served 100,000 ad impressions. The publisher would calculate their eCPM as follows:

$175 ÷ 100,000 × 1,000 = $1.75 eCPM

In other words, for every 1,000 impressions, the publisher or app developer will generate $1.75 in revenue.

On the other hand, CPM is a price and reach metric employed to estimate the cost of a campaign and its reach within an advertiser’s budget.

CPM vs CPC

Whereas CPM is focused on awareness, CPC (cost per click) works better for driving conversions.

With this model, advertisers only pay the publisher when a user clicks on their ad. This means they’re paying for engagement, rather than passive views. A high number of clicks means more revenue for the publisher, and suggests viewers are interested and engaged — although it can get expensive for the advertiser.

CPM vs CPA

CPA, or cost per action, is a pricing model where marketers pay ad networks or media sources only when an ad leads to specific conversions (such as a purchase or registration). It’s used in mobile marketing, when the goal is to encourage users to take particular actions inside an app.

Basically, CPM is all about the impressions and impressions only, whereas CPA tells you how many people took the action you wanted after engaging with your ad.

CPM vs CPV

CPV, or cost per view, is a model where the advertiser pays the publisher for every view of their video ad. Normally, the user needs to watch for a certain length of time for it to qualify as a “view”.

Watching a video is a good indicator of engagement, so this is cost effective for advertisers — they’re not paying for passive views or accidental clicks. On the other hand, CPM is about buying impressions at scale, whether or not users engage with them.

CPM vs CPI

Whereas CPM is about awareness, CPI is what to focus on in user acquisition campaigns. It stands for cost per install, meaning the advertiser pays the publisher every time an impression of their ad leads to an app install.

CPI tends to be more expensive than CPM because of its direct impact on acquisition.

Best practices to improve your CPM

We outlined earlier how a “good” CPM will look different for everyone. But there are some steps you can take to improve yours:

1. Choose the right audience. The sharper your targeting, the more relevant your ads will be. That brings more leads and conversions, so you get more for your budget.
2. But don’t bombard them. Monitor the frequency of your ads so you’re not repeatedly showing them to the same people.
3. Find the right placement. Where ads appear in an app or web page affects their visibility and how users engage with them. Make sure you’re not wasting your budget on placements that don’t convert.
4. Work on your creatives. If you want people to notice and remember your brand, you need to stand out. Stunning visuals, killer copy, and a consistent look and feel are essential.
5. Remember seasonality. CPM can increase at seasonal peaks, like holidays, as competition among advertisers heats up. To make your ads work as hard as possible, ensure they’re relevant, timely, and engaging.
6. Test and refine. Keep monitoring your CPM alongside other metrics, and analyze what’s working and what’s not. Then you can refine your targeting, placements, creatives, and more for optimal results.

What about Facebook?

We all know Facebook is a popular advertising platform, but costs can quickly spiral if you’re not careful. Luckily, there are a few things you can do to rein in your CPM:

• Improve your Customer Feedback Score. Facebook randomly surveys customers who’ve made a purchase after clicking on an ad — and better scores equal lower CPMs for the advertiser. So, aim to create a five-star user experience, from your landing page to your checkout and post-sales support.
• Improve your relevance. Facebook charges lower CPMs for more relevant ads — in other words, those that generate high engagement. So refine your target audience, experiment with different formats, and finetune your creatives, using A/B testing to achieve the most engaging combo.
• Use automation and retargeting. Make the most of Facebook’s automatic placement feature, and its automated rules to help you monitor and manage campaigns. These will save you time and optimize results. Its retargeting option lets you show your ads to users who’ve already shown an interest in your brand, and therefore are more likely to convert.

Frequently asked questions

Key takeaways

Along with remembering that the M stands for “thousand,” here’s what you need to know about CPM:

1. CPM indicates the cost of one thousand ad impressions on a page or site.
2. It’s useful for building awareness because it prioritizes exposure over conversions. Other benefits include clear, transparent pricing and the ease of scaling and optimizing campaigns. However, limitations include lack of engagement data and risk of fraud.
3. CPM is calculated using this formula: Total campaign spend ÷ Number of impressions × 1,000.
4. CPM varies considerably across industries and platforms, and is also influenced by location and seasonal factors. This means it’s best to focus on the value of your impressions, rather than aiming for an “average” CPM.
5. CPM is used by advertisers and publishers to estimate ad spend within a budget, whereas eCPM is used by publishers to indicate revenue. Alternate pricing models include CPC, CPA, CPV, and CPI, which focus on driving specific actions or engagements.
6. Strategies to improve your CPM include refining targeting, placement, frequency, and creatives to make your ads work as hard as possible. Consider seasonal factors and keep measuring performance. On Facebook, work to improve your customer experience and relevance scores, and make use of automation and retargeting.