CPM stands for cost per mille (the French word for “thousand”). Though often confused by those not familiar with the ad industry as cost per million, this metric actually refers to the all-in cost for an advertiser to run 1,000 impressions of an individual ad unit.
For example, a $5 CPM associated with a 728×90 leaderboard means that the advertiser would pay $5 for every 1,000 of those ad units served. If an IO ordered 100,000 ad units the total cost would be $500.
This pricing model is also sometimes known ad cost per impression, since the advertiser pays for each ad served, not per a specific result (i.e. a sale, registration, opt-in).
It’s critical to understand the difference between CPM (cost per mille) and RPM (revenue per mille). The differences are pretty obvious but it’s an important thing to keep in mind.
In some cases, these numbers will be the same. More often than not, there are big gaps between these two figures and there are a myriad of reasons why this might be.
The most common reason for this is an ad network. If a publisher decides to use an ad network instead of working with an advertiser directly, the network will take their cut (often a big one). The advertiser may pay a CPM of $5 and the publishers RPM may well be $1.5.
The cost per impression (aka CPM) pricing model is most often used in display advertising. If this is something you’ve got an interest in, we have a lot of resources on it.
For advertisers, knowing the CPM is very important since it is the way to measure how the auctions situation at the time and it will impact your ads. If your CPM gets higher, then your Cost Per Result (CPR) most likely gets higher as well.
In some cases, there are times where CPM higher, especially at weekends and holidays. Because many advertisers spend on their advertisement on those particular days so it will impact the bidding.
It is possible for the number of ad impressions to differ from the number of page visitors to the website displaying the ad. An ad might get placement in two locations on a website, such as a horizontal banner and a vertical side banner. So the advertiser pays for two impressions per page view
CPM stands for cost per mile (thousand). This is the amount that an advertiser pays for one thousand impressions in reference to online advertising.
CPM is used to determine how much the advertiser will pay per thousand impressions, while RPM is the amount a website publisher will earn per 1000 impressions.
Basically, to calculate CPM is by taking the cost advertisement and dividing by the total number of impression, then multiplying the total by 1000 ( CPM = Cost/Impression x 1000 )
The average CPM is different on each platform. For the largest platform, the CPM is higher than the other because there are many advertisers bid on the auction to show their advertisement
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