Quick Definition
Cost Per Mille (CPM), also called Cost Per Thousand Impressions, is an advertising metric that measures the cost of reaching 1,000 people (or 1,000 impressions). CPM is calculated by dividing total advertising cost by the number of impressions (divided by 1,000). CPM is commonly used for brand awareness campaigns, display advertising, and video advertising where the objective is reach rather than direct response. CPM enables advertisers to compare the cost-efficiency of different advertising channels and campaigns for reaching audiences.
Why It Matters
CPM is important for B2B companies running brand awareness campaigns or display advertising. CPM enables companies to: compare cost-efficiency of different advertising channels, optimize budget allocation for awareness campaigns, forecast reach based on budget, and evaluate the efficiency of brand-building efforts. For B2B companies, CPM is less critical than response metrics (CPC, CPL, CPA) but is still important for brand awareness and display advertising campaigns.
How It Works
CPM is calculated using the formula: CPM = (Total Cost / Impressions) × 1,000. The numerator is total advertising cost. The denominator is number of impressions (number of times the ad was displayed). The result is multiplied by 1,000 to express cost per thousand impressions. CPM should be calculated for specific campaigns, channels, or time periods and tracked over time to identify trends.
Real-World B2B Example
A B2B SaaS company running display advertising calculates CPM: they spend $10,000 on display ads and receive 500,000 impressions. CPM = ($10,000 / 500,000) × 1,000 = $20 CPM. This means they pay $20 for every 1,000 impressions. They compare this to other channels and campaigns to optimize brand awareness spend.
Common Use Cases
- Comparing cost-efficiency of advertising channels
- Optimizing brand awareness campaigns
- Forecasting reach based on budget
- Evaluating display advertising efficiency
- Optimizing video advertising spend
Common Mistakes to Avoid
- Focusing only on CPM without considering engagement or conversion
- Not accounting for viewability in CPM calculations
- Comparing CPM across channels with different audience quality
- Not tracking CPM trends over time
Frequently Asked Questions
How is CPM different from CPC?
CPM measures cost per 1,000 impressions (reach). CPC measures cost per click (action). CPM is for awareness; CPC is for response. CPM is used for brand campaigns; CPC is used for direct response campaigns.
What is a good CPM?
There is no universal "good" CPM: it depends on channel, audience, industry, and campaign objectives. B2B CPMs are typically higher than B2C because B2B audiences are more targeted. Evaluate CPM in context of campaign objectives and audience quality.
When should you use CPM vs CPC?
Use CPM for brand awareness campaigns where reach is the objective. Use CPC for direct response campaigns where clicks or conversions are the objective. Choose based on campaign objectives.