Cost Per Thousand, or CPM, is a digital advertising model where advertisers pay for every 1,000 times their ad is displayed, known as “impressions.” The “M” in CPM stands for “mille,” the Latin word for “thousand.” CPM is commonly used in display and social media advertising to increase brand visibility by paying for ad views rather than clicks or actions.
How CPM Works
With CPM, advertisers set a budget for the cost they’re willing to pay per 1,000 ad impressions. Every time the ad appears on a user’s screen, it counts as one impression. Once the ad reaches 1,000 impressions, the advertiser is charged according to their CPM rate. This model is especially useful for campaigns focused on building brand awareness rather than driving immediate actions.
Benefits of CPM
- Increases Brand Exposure
CPM campaigns reach a broad audience, helping to create awareness of a brand or product by showing ads to as many users as possible. - Predictable Budgeting
CPM offers a straightforward cost structure, allowing advertisers to plan their budget based on the number of impressions, making it easier to control ad spending. - Ideal for Visual Ads
CPM is commonly used for image or video ads where visuals play a key role. Since users don’t need to click on the ad, this model is effective for brand-building campaigns.
CPM Compared to Other Pricing Models
| Pricing Model | Description |
| CPM (Cost Per Thousand) | Pay for every 1,000 ad impressions. |
| CPC (Cost Per Click) | Pay each time someone clicks on an ad. |
| CPA (Cost Per Action) | Pay only when a user completes a specific action. |
How to Estimate CPM
To estimate the CPM rate, divide the total advertising spend by the number of impressions and then multiply by 1,000. For example, if you spent $100 on an ad campaign that received 20,000 impressions, your CPM would be $5. This means you’re paying $5 for every 1,000 times your ad is shown.
When to Use CPM
CPM is effective when:
- Building Brand Awareness: It helps reach large audiences, making it ideal for generating general brand awareness.
- Promoting Visual Content: CPM works well with visual ads that communicate a message even without clicks.
- Fixed Budget Planning: CPM provides predictable costs based on impression goals, helping manage budgets for awareness campaigns.
Cost Per Thousand (CPM) is a common ad pricing model where advertisers pay for every 1,000 views or impressions of their ad. CPM is particularly useful for brand awareness campaigns, enabling businesses to reach a large audience and control costs based on impressions rather than direct user interactions.