Cost per mille (CPM), also called cost ‰ and cost per thousand (CPT), is a commonly used measurement in advertising. In Latin mille means thousand, therefore, CPM means cost per thousand. Radio, television, newspaper, magazine, Out-of-home advertising and online advertising can be purchased on the basis of what it costs to show the ad to one thousand viewers (CPM). It is used in marketing as a benchmark to calculate the relative cost of an advertising campaign or an ad message in a given medium. Rather than an absolute cost, CPM estimates the cost per 1000 views of the ad.
An example of computing the CPM:
- Total cost for running the ad is $15,000.
- The total audience is 2,400,000 people.
- CPM is calculated as CPM = $15,000/(2,400,000/1000) = $6.25
- In online advertising, if a website sells banner ads for a $20 CPM, that means it costs $20 to show the banner on 1000 page views.
- While the Super Bowl has the highest per-spot ad cost in the United States, it also has the most television viewers annually. Consequently, its CPM may be comparable to a less expensive spot aired during standard programming. (But the truth is that Super Bowl prices have been as much as double a regular prime-time ad, because advertisers are willing to pay to be part of 'the event' that is the Super Bowl broadcast.)