What is CPM?
CPM is an abbreviation that stands for "Cost Per Mille" — meaning "price per thousand". The "M", which stands for Mille, is Latin for "thousand". CPM is a billing model most commonly used in connection with paid online advertising, and describes the price you pay for 1,000 impressions of your paid ads.
What are CPM prices?
The CPM price is the price you pay for 1,000 impressions/exposures of an ad. For example, if you have a CPM price of 300 DKK, it means you pay 300 DKK per thousand impressions.
The exact CPM price in monetary terms depends on the product, the advertising platform, and more — which is ultimately determined by supply and demand.
CPM is, like CPS, CPA and others, an auction model where advertisers bid against each other to have their ads shown.
How is CPM calculated?
CPM, which is the price per thousand impressions, is calculated simply as follows:
CPM = Amount spent on ad campaign / Number of impressions * 1000
An example: you have spent 1,800 DKK on your advertising and received 5,000 impressions:
CPM = 1800 / 5000 * 1000 = 360 DKK per thousand impressions.
In this case, your CPM price is therefore 360 DKK.
When is CPM used?
CPM is used when the primary objective of a marketing campaign or marketing strategy is increased brand awareness.
In that context, CPM is a useful KPI that quickly and conveniently gives you an overview of what you are paying for your impressions, and where and how you achieve the most cost-effective exposure.
CPM is therefore most often used as a pricing model for, for example, display ads on websites, but can also be used for Google Ads, YouTube ads, and more.
Most commonly, however, CPC (Cost-Per-Click) is used today on platforms such as Google Ads.
CPM advantages and disadvantages (CPM vs. CPC)
The advantage of using CPC (Cost-Per-Click) over CPM — and the reason it is the most widely used billing model today — is that you only actually pay for the clicks you receive.
With CPM, you pay for the number of impressions — but 1,000 impressions can easily result in 0 clicks.
CPM should therefore only be used for advertising and as a primary KPI in marketing campaigns where the main goal is increased brand awareness — not direct revenue and conversions. These should be considered "secondary" when using CPM.
The advantage of CPM is that you can easily and quickly see where and how you get the most impressions (and increased brand awareness) for the lowest possible price.
Would you like to increase awareness of your business with effective ads? Fill in the form below, or call us on 30 12 42 72 for a no-obligation chat about how we can help you optimise your CPM strategy and maximise your exposure.
