What is Cost per Mille (CPM)?
Cost Per Mille (CPM) is a pricing model where advertisers pay for every 1,000 ad impressions, regardless of user clicks or conversions. CPM is ideal for brand awareness campaigns, display ads, and video advertising, where visibility matters more than direct conversions.
Example:
A Shopify store runs a TikTok Ads campaign with a CPM of $5.00. This means they pay $5 for every 1,000 times their ad is displayed.
❓ How platforms define an “impression”
- Google Ads & Display Networks: An ad is considered “seen” when it loads on the page.
- Facebook & Instagram Ads: An impression is counted when the ad enters the user’s feed.
- YouTube & Video Ads: A viewable impression happens when at least 50% of the ad is visible for 2+ seconds.
How to calculate CPM?
Formula
CPM = Total Ad Spend Total Impressions × 1000
Example:
- Total ad spend: $1,000
- Total impressions: 500,000
CPM = (1,000 / 500,000) x 1000 = $2
This means the advertiser pays $2 for every 1,000 impressions.
CPM vs. CPC vs. CPA
CPM is best for visibility, while CPC and CPA focus more on engagement and conversions.
| Metric | How it works | Best for | Key difference |
| CPM (Cost Per Mille) | Pays per 1,000 ad impressions. | Brand awareness & reach | Charges for visibility, not engagement. |
| CPC (Cost Per Click) | Pays only when a user clicks the ad. | Traffic & conversions | Focuses on engagement rather than views. |
| CPA (Cost Per Action) | Pays only when a user completes a desired action. | Sales & lead generation | Prioritizes ROI & conversions over impressions. |
What’s different between CPM vs. eCPM?
CPM is the cost advertisers pay per 1,000 impressions, meanwhile, eCPM (Effective Cost Per Mille) measures revenue earned per 1,000 impressions.
| Metric | Definition | Used by |
| CPM | Cost advertisers pay per 1,000 ad impressions. | Advertisers running display & video ads. |
| eCPM | Revenue publishers earn per 1,000 impressions. | Publishers & ad networks monetizing traffic. |
3 strategies to optimize CPM
Maximizing CPM efficiency can help your ads reach the right audience at the lowest cost.
1. Improve ad relevance & Quality Score
- Ad platforms reward high-quality, engaging ads with lower CPMs.
- Use compelling visuals, attention-grabbing headlines, and clear CTAs.
2. Refine audience targeting
- Avoid broad targeting, narrow your audience to high-intent users.
- Test lookalike audiences, retargeting, and interest-based targeting.
3. A/B test creatives & placements
- Test different ad creatives, formats, and placements to identify cost-efficient options.
- Use video, carousel, and interactive ads to improve engagement.
