How To Calculate CPM

CPM is the abbreviated form of "cost per mille", with mille being the French word for 1000. So CPM translates quite literally into cost /1000 views. There are other synonyms such as cost per thousand (CPT), or cost per impression (CPI - not to be confused with cost per install).

Being able to calculate your CPM allows you to understand the most common unit of measurement used in display ad buys. Display advertising is not a performance channel, and typically we do not attempt to measure the value on a cost per click basis. This is because clicks happen less frequently with display buys and  because it is a advertising channel which is much more upper funnel in nature.

In the case of publisher sites, understanding CPMs you're able to assess both the demand for a particular websites traffic and have a effective metric to compare traffic sources. Some very useful formulas for calculating CPM's are:

CPM = (Cost  / No. of Impressions) x 1000

Now when you work the formula in reviews, you're also able to calculate your total campaign costs if you know your CPM's and total impressions.

Cost = CPM x (Impressions / 1000)

Another useful formula is one which allows you to forecast the number to total impressions you can purchase given your existing budget and the CPM.

Impressions = (Cost / CPM)