What is CPM and How Do You Calculate It?
When purchasing a planned media buy, a term that you will encounter often is “CPM.” Those unfamiliar with the CPM model sometimes mistakenly think that the “M” in “CPM” stands for “million” while in reality the “M” stands for the Roman numeral for “thousand” (1,000). So “CPM” literally means “Cost per thousand.”
When calculating CPMs there are three numbers that you will continually use:
- Total number of impressions
- The CPM itself
- Total cost of campaign
To determine a CPM, the cost of campaign, or the number of impressions, all you need is two of the three aforementioned metrics. Below are the formulas to solve any CPM-related questions:
- (Total number of Impressions / 1000) * CPM = Total cost of campaign
- (Total cost of campaign / CPM) * 1000 = Total number of impressions
- Total cost of campaign / (Total number of impressions / 1000) = CPM
When manually calculating CPMs, the cost per thousand is written as a total like this: $25CPM
A $25CPM basically means that you will be purchasing advertisements for 2.5 cents each. So if you have a campaign goal of purchasing 100,000 impressions at a $25CPM, then the math looks like this:
(100,000/1000) * 25 = $2,500 Total cost of campaign.
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