CPM, or Cost Per Mille, is a key metric in digital advertising that measures the cost of 1,000 impressions on an ad. Advertisers use CPM to evaluate the cost-effectiveness of their campaigns, while publishers rely on it to estimate potential earnings.
The CPM model is widely used in display advertising, where advertisers pay a fixed rate for every 1,000 views of their ad, regardless of user interaction. This makes CPM a popular choice for brand awareness campaigns.
To calculate revenue using CPM, the formula is simple:
Revenue = (CPM × Impressions) ÷ 1000
For example, if your CPM is $2 and you receive 500,000 impressions, your earnings would be:
($2 × 500,000) ÷ 1000 = $1000
Factors influencing CPM rates include audience demographics, ad placement, website niche, and advertiser demand. Websites with a high engagement rate and premium audience tend to attract higher CPM rates.
By understanding and optimizing CPM, publishers can maximize their advertising revenue. Experimenting with different ad networks, placements, and formats can help increase earnings over time.