The abbreviation CPM is an advertising term that stands for “cost per thousand impressions” and is used to compare the cost of reaching potential customers.
In online advertising, an impression is when an ad is displayed to a person on a webpage. So, if a person is viewing a webpage that has your ad somewhere on it, that counts as one impression.
To calculate the CPM of an advertising campaign, you need to divide the cost by the number of impressions. Here’s an example:
If your one-month advertising campaign cost $200 and had 5,000 impressions, you paid 4 cents per impression. (Calculation: $200/5,000 = $.04)
The M in CPM stands for a thousand impressions. In the example above, you would multiply the cost per single impression by 1,000 to find the cost per thousand impressions:
Calculation: $.04 x 1,000 = $40 per thousand impressions ($40 CPM)