Cost per thousand impressions (CPM) is one of the most common metrics used in digital advertising and media buying. Calculating CPM allows you to determine the cost efficiency of an advertising campaign and compare different media channels.
This article will provide everything you need to know about CPM and how to calculate it, along with a comprehensive CPM calculator to use for your ad campaigns.
CPM stands for "cost per mille" which means the cost per thousand impressions. An impression refers to one instance of an ad being loaded and displayed. CPM represents how much it costs an advertiser to get their ad seen 1000 times.
For digital marketing and media buying, CPM is an essential metric to determine the value of inventory and benchmark different platforms. Some benefits of using CPM include:
Because it provides a standard measurement, CPM has become the preferred pricing model for digital media buying across display, native, video, and mobile formats. Whether you're an advertiser, publisher, or media agency, understanding CPM is essential.
The formula to calculate CPM is very simple:
CPM = Cost of Ad Campaign / Impressions Delivered * 1000
For example:
The most basic way to calculate CPM requires just two pieces of data:
Cost of the ad campaign: This includes all the fees paid to the platform or publisher to run the ads for a specific period or goal. Make sure to only include the actual ad costs in the calculation.
Impressions delivered: The number of verified impressions recorded for your ads during the campaign. Most ad platforms will provide this metric.
Plug those numbers into the CPM formula to quickly compare campaigns across different channels. The lower the CPM, the more impressions delivered for your budget.
To accurately assess media value and efficiency, it’s ideal to calculate CPM over longer periods or lifetime budgets rather than individual placements. For example, you may spend $50,000 over 3 months across multiple platforms to achieve 7,500,000 impressions. Using the lifetime budget value gives a true CPM of $6.67.
To make it easy to determine CPM for your campaigns, you can use this comprehensive CPM Calculator:
<iframe src="https://www.omnicalculator.com/embed/cpm" width="100%" height="500px"></iframe>
Just enter your total campaign cost and impressions delivered, and the calculator will instantly figure out your CPM. It works for both lifetime budgets across platforms as well as individual placements.
You can also enter your target impression goal to see the estimated cost required to achieve that reach. The CPM calculator provides a quick and easy way to assess your campaign efficiency and media value.
While the basic CPM formula is easy, many factors influence the CPM values you’ll see for different ad placements:
Higher impact and engagement ad units like video tend to command significantly higher CPMs compared to basic display ads. Video CPMs range from $10-$50+ depending on quality and platform.
Newer immersive formats like virtual reality also have very high CPMs due to limited supply.
Where your ads are shown makes a big difference. YouTube inventory will be more expensive than a smaller video site. Premium placements like homepage takeovers and roadblocks have higher CPMs than buried sidebar ads.
Unique inventory like connected TV or airport media demands higher value.
The more granular your audience targeting, the higher the CPM. Broad targeting like “all women 18-49” will have low CPMs starting around $2-$5. But specially targeted groups like “new moms” or “small business owners” could be $50+.
CPM depends heavily on the supply of ad space and demand from advertisers. More scarcity and competition drive prices up. Holiday seasons often see CPM spikes across e-commerce advertisers. Popular platforms can charge more as the budget shifts to digital video and social media.
The more often ads are served to the same users, the higher the CPM. Capping frequency improves efficiency, but extremely low-frequency caps lead to loss of reach and higher CPMs. Optimizing frequency settings based on campaign goals balances value and scale.
Well-optimized campaigns focused on conversions and growth achieve lower CPMs over time. Poor-performing placements are removed while successful assets continue to run. Continually refine targeting, creatives, platforms, and settings to improve CPM.
Analyzing current CPM is only part of the process. Apply optimizations to efficiently scale your media budget.
There is no universal “good” CPM since it depends on many factors. Video ads will be $15-$30+ while Facebook newsfeed starts around $5. Higher-end placements like rich media or connected TV expect $50+ CPMs.
The key is to analyze your current CPM and aim to gradually improve by testing new channels, formats, and audiences. Reduce wasted spend on underperforming placements. Build a balanced media plan across both scale and premium sources.
Examine both CPM and performance metrics. A lower CPM placement that sees higher engagement or conversions may be more valuable than a broad site with a very low CPM. Apply what you learn to develop more refined targeting and creative strategies.
With experience, you will get a better sense of value thresholds for different segments. But expect CPMs to fluctuate across campaigns. Focus on efficiently reaching your marketing KPIs rather than an arbitrary CPM number.
Setting realistic CPM benchmarks by channel, inventory, and audience is crucial for maximizing your media dollars. Here are some best practices for optimizing budgets using CPM:
With the right CPM benchmarks tailored to your unique audience and media objectives, you can stretch your media dollars significantly further. Maintaining an efficient CPM should be an ongoing optimization goal as the media landscape continuously evolves.
A: Calculating CPM in Excel is easy using the same formula:
(Cost of Campaign/Impressions)*1000
Plug the cost and impressions into separate cells, then use the formula to output the CPM value. You can also use Excel to track CPM over time and compare placements.
A: To accurately benchmark media, CPM should only include the actual cost of impressions. Additional fees for agency services, verification, or technology partners should not be counted in the impression costs.
A: Average Facebook ad CPMs range from $5-$15 based on targeting, placement and competition. Well-targeted conversion campaigns can achieve $5 CPM for newsfeeds on desktop and mobile. Brand awareness video ads run closer to $10-$15.
A: Basic programmatic display CPMs often start very low at $1-$2. To further reduce CPM focus on cleaning your audience data, avoiding general keyword targeting, capping frequency, trying different inventory sources and optimizing towards conversions.
A: As a rough benchmark:
Calculating CPM is a vital skill for any digital marketer or media buyer looking to maximize their ad budget. By tracking CPM in a dedicated spreadsheet or using our CPM calculator, you can quickly compare the value of different platforms, placements, and audiences.
Apply what you learn to refine your targeting and creative approaches over time. With the right benchmarks tailored to your campaign objectives, you can stretch your media dollars much further.
Use CPM as an optimization tool, rather than focusing solely on achieving the lowest number. With the strategies outlined in this complete guide, you now know how to accurately assess media value, improve the efficiency of your campaigns, and boost performance.
