CPM is short for Cost Per Mille, with “Mille” here being the Latin word for thousand (not million). The term is used to identify the cost of showing 1,000 people an online advertisement. The metric has been used for several years as a standard device to show the relative cost-effectiveness of different marketing strategies, be they online PPC adverts, or radio, television and other advertisements.
With the CPM of an advertising campaign worked out, it’s easier to calculate the ROI (Return on Investment) of each campaign. That’s helpful to marketers who are attempting to make more money from their campaigns than they spend on getting them seen.
Calculating CPM
Calculating a campaign’s CPM is simple. You’ll need to know the cost of the campaign, of course, which should be easy to access from your accounts or finance team. Bring together all the relevant costs so that you have one single figure. Now, use data from the advertising platform itself, such as clicks on an advert or a TV audience over a certain commercial break, in order to ascertain the total number of viewers reached.
If a campaign cost £5,000 and it had a viewing audience of 2,000, the CPM will be £2,500. Simply divide the audience reached by 1,000 (2) and then divide the cost of the project (£5000) with this figure (which would give £2,500 in this example).
