What CPM means
CPM stands for cost per mille, Latin for thousand. It is the price you pay for 1,000 impressions of an ad, whether that is a banner, a video, a podcast spot or a post in a social feed. Most display, video and social campaigns are sold or at least reported this way, which makes CPM the common unit for comparing the cost of attention across channels.
Because it is a price per thousand, you can turn it around. If you know two of the three numbers, cost, impressions and CPM, you get the third. The calculator does this in the Solve for switch.
CPM, CPC, CTR, CPA and conversion rate
CPM tells you what attention costs. The metrics further down the funnel tell you what that attention turned into. The example column uses $500 of ad spend, 250,000 impressions, 1,250 clicks and 25 conversions.
| Metric | Formula | Example |
|---|---|---|
| CPMCost per thousand impressions | Cost ÷ Impressions × 1,000 | $2.00 |
| CPCCost per click | Cost ÷ Clicks | $0.40 |
| CTRClick-through rate | Clicks ÷ Impressions × 100 | 0.50% |
| CPACost per acquisition | Cost ÷ Conversions | $20.00 |
| CVRConversion rate | Conversions ÷ Clicks × 100 | 2.00% |
The numbers depend on each other. CPC is the CPM divided by ten times the CTR in percent, here $2.00 ÷ (0.5 × 10) = $0.40, so a higher click-through rate lowers your cost per click even when the CPM stays the same. In the same way, a better conversion rate lowers the CPA.
What is a typical CPM?
There is no reliable single number, and any benchmark you read is a rough guide at best. CPMs vary by platform, ad format, country, season, audience size and how many other advertisers compete for the same people. As a very loose orientation, broad display and programmatic inventory often costs a few dollars per thousand impressions, social feeds tend to sit somewhat higher, and narrow audiences such as senior B2B decision makers can cost many times more. Prices usually climb in the weeks before the holidays.
Click-through rates vary just as much. Display banners often stay well under 1%, while search ads, shown to people who are already looking for something, usually do better. Your own past campaigns on the same platform are the only benchmark that really counts.
Planning an ad budget with CPM
Switch the calculator to Solve for Cost to turn a reach goal into a budget. Say you want 2,000,000 impressions and expect a CPM of $6:
- Budget: 2,000,000 ÷ 1,000 × $6 = $12,000.00.
- Clicks: at a 0.8% CTR that is 16,000 clicks, a CPC of $0.75.
- Conversions: at a 2.5% conversion rate you get 400 conversions, a CPA of $30.00.
If a conversion is worth less to you than that CPA, change the plan before you spend the money: target a smaller and better fitting audience, improve the ad to raise the CTR, or work on the landing page to lift the conversion rate. Solve for Impressions does the reverse and shows how much reach a fixed budget buys.
How to use the CPM calculator
- 1Choose what to solve for: the CPM of a campaign that ran, the cost of a planned one, or the impressions a budget buys.
- 2Enter the two numbers you know, using the totals from your ad manager for the same date range.
- 3Add clicks and conversions to see CPC, CTR, CPA and conversion rate, then copy the result or a link for your report.
Frequently asked questions
What does CPM stand for?
Cost per mille, where mille is Latin for thousand. It is the price of 1,000 ad impressions. Ad platforms also call it cost per thousand or CPT, and the same idea is used for TV, radio and print.
How do I calculate CPM?
Divide the total cost by the number of impressions and multiply by 1,000. A campaign that cost $500 and reached 250,000 impressions has a CPM of 500 ÷ 250,000 × 1,000 = $2.00.
Is a lower CPM always better?
No. Cheap impressions are often cheap because few people notice them or because the audience is a poor fit. Judge a campaign by what you pay for the result you want, usually the CPA. A higher CPM with a much better click-through and conversion rate can win easily.
What is eCPM?
Effective CPM is total cost or revenue divided by impressions, times 1,000, for campaigns that are not bought per impression. Advertisers use it to compare a CPC or CPA campaign with a CPM one. Publishers use it to see what 1,000 impressions earn them. The formula is the same as CPM.
Are impressions the same as reach?
No. Impressions count every time the ad was shown, reach counts the number of different people who saw it. If 50,000 people saw your ad five times each, that is 250,000 impressions. Impressions divided by reach is the frequency.