Definition
CPM (cost per mille) is the cost per 1,000 impressions. It reflects auction pressure, audience size, and placement mix.
CPM formula
CPM = (ad spend / impressions) * 1000
How to calculate CPM (step-by-step)
- Choose a time window and placement mix.
- Sum ad spend for that window.
- Count impressions for that same window.
- Divide spend by impressions and multiply by 1,000.
CPM example
If you spend $1,200 for 100,000 impressions, CPM = ($1,200 / 100,000) * 1000 = $12.
How CPM affects CPC and CPA
- CPC ~ CPM / (1000 * CTR), so higher CPM raises CPC unless CTR improves.
- CPA depends on both CPC and CVR, so rising CPM can worsen CPA quickly.
- Use break-even CPM to set upper bounds by placement.
What drives CPM
- Auction pressure and seasonality.
- Audience size and targeting constraints.
- Placement and format mix (feed vs video vs search).
- Creative relevance and predicted engagement.
Common mistakes
- Judging CPM without considering CTR, CVR, and margin.
- Comparing CPM across placements with different intent.
- Optimizing for low CPM at the expense of quality and conversion.