CPM – what it means and how to calculate cost per thousand impressions

Definition

CPM, cost per mille, is what it costs to show an ad a thousand times. You work it out by dividing the cost by the number of impressions and multiplying by 1,000.

Calculate CPM

Choose whether to work out CPM, impressions or budget, and fill in the other two. Add a click-through rate and you also see how many clicks the impressions bring and what each click costs.

CPM calculator

Choose what to work out and fill in the other two values. Add a CTR to see clicks and cost per click. The starting figures are an example, not a benchmark.

CPM (SEK)ImpressionsBudget (SEK)CTR in per cent (optional)

• CPM80 SEK10,000 SEK ÷ 125,000 impressions × 1,000 = 80 SEK
• Clicks1,000 clicks
• Cost per click (CPC)10 SEK

At a 0.8 % CTR that is 1,000 clicks for 10,000 SEK.

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What does CPM mean?

CPM stands for cost per mille, the cost per thousand impressions. Mille is Latin for thousand. An impression is counted every time the ad is shown, so one person can account for several impressions.

Ad platforms such as Meta and LinkedIn report CPM for every campaign, even when you pay per click. The metric shows what it costs to be seen, however you buy the ads.

The formula, and how CPM relates to CPC and CTR

Budget, impressions and CPM sit in the same equation, so any two give you the third:

• CPM = cost ÷ impressions × 1,000
• Impressions = budget ÷ CPM × 1,000
• Budget = CPM × impressions ÷ 1,000

The click-through rate links impressions and clicks. Google defines CTR as clicks divided by impressions (Google), so CPM = CPC × CTR × 1,000 also holds.

That gives you the break-even point when choosing between buying impressions and buying clicks. A CPM buy gives cheaper clicks than a CPC buy when the CTR is above CPM ÷ (CPC × 1,000). If impressions cost SEK 80 per thousand and clicks SEK 10 each, break-even is 80 ÷ 10,000 = 0.8 per cent. Above 0.8 per cent, the CPM buy is cheaper per click.

CPM, vCPM, CPC and CPA

In Google Ads, there is no bidding per thousand impressions for campaigns that run on the Search Network only; there you pay per click. For display ads the bid strategy is called vCPM: you pay for impressions measured as viewable (Google).

What affects CPM?

Ad space is usually sold at auction, so the price is set by how many advertisers want to reach the same people at the same time.

• The audience. A narrow audience that many advertisers want, such as decision-makers in one industry, costs more per impression than a broad one.
• Channel and format. Video, large formats and placements high on the page generally cost more than small banners.
• Timing. Periods when many advertisers are active at once, such as the run-up to Christmas, push auction prices up.
• The ad itself. Platforms factor in how relevant the ad is to the person seeing it, so an ad nobody engages with can cost more to show.

When a low CPM is not good

A low CPM means the impressions are cheap, not that the campaign works. Cheap impressions often land on placements few people look at, or reach an audience that never buys. Judge the campaign on results, such as cost per purchase (CPA) or return on ad spend (ROAS), and use CPM to understand why the result came out as it did.

If you tag ad links with UTM parameters and the medium cpm, the visits match both GA4's rule for paid traffic and its rule for Display. Which channel they land in then depends on the source: a source on Google's list of social networks gives Paid Social, an unknown source gives Display.