CPM, or Cost Per Mille, is a pricing model referring to the cost of 1,000 ad impressions. It’s sometimes referred to as Cost Per Thousand (with the “M” standing for ‘mille’ or Latin for 1,000). CPM is an important metric for both advertisers and app developers, since it defines how much ad space will cost, and therefore how much developers or publishers will get paid for every 1,000 unique impressions. Today, CPM is a regularly employed method for pricing mobile app advertising space.
One common way to determine the efficiency of a CPM campaign is to look at click-through rates, or the ratio of clicks an ad receives compared to overall impressions.
Unlike other measures such as cost per click (CPC), CPM pricing is ideal for campaigns with a goal of increasing exposure and brand awareness instead of specific user action goals, like installing an app or registering for a service.
CPM is also used as part of measuring effective cost per thousand impressions, or eCPM. While both measure costs for 1,000 impressions, the former is exclusively based on how much an advertiser is willing to spend on 1,000 ad impressions, and typically exists in the context of brand awareness campaigns that don’t have specific performance goals. The advertiser is looking for a specific amount of impressions, or eyeballs, and that is what they pay for.
In contrast, eCPM also includes CPM but measures the cost of 1,000 impressions in the context of a campaign with a pricing model based on performance. In practice, this means that the cost per thousand impressions is calculated based on how many impressions it takes to achieve a performance goal, like an install, or registration.
Calculating CPM requires having some basic data on an app’s ad impressions – such as the total cost of the campaign, as well as the number of impressions it received. To measure CPM, you divide the total cost of the campaign by the number of impressions. The result is then multiplied by 1,000, generating the CPM figure. For example, if the total cost to run a campaign is $300, and it receives 5000 impressions.
The CPM for the ad would be $60.