What is CPM?
CPM stands for Cost Per Mille (mille being Latin for thousand). It represents the cost an advertiser pays for 1,000 impressions of their ad. CPM is one of the most common pricing models in digital advertising, particularly for display ads, video ads, and programmatic advertising.
CPM Formula
The CPM formula is straightforward:
CPM = (Total Ad Spend / Total Impressions) × 1,000
When to Use CPM
- Brand Awareness Campaigns: When your goal is maximum visibility rather than direct conversions
- Display Advertising: Banner ads, native ads, and rich media placements
- Video Advertising: Pre-roll, mid-roll, and out-stream video ads
- Programmatic Buying: Real-time bidding (RTB) and private marketplace deals
- Social Media Advertising: Reach-focused campaigns on platforms like Facebook, Instagram, and LinkedIn
CPM Benchmarks by Platform
Average CPM rates vary significantly by platform and industry:
- Google Display Network: $0.50 - $4.00
- Facebook/Instagram: $5.00 - $15.00
- YouTube: $4.00 - $10.00
- LinkedIn: $6.00 - $12.00
- Programmatic Display: $0.50 - $3.00
How to Lower Your CPM
- Improve ad relevance and quality scores
- Target audiences more precisely
- Test different ad formats and placements
- Optimize bidding strategies
- Use frequency capping to avoid ad fatigue