Digital marketing glossary
What is CPM (cost per thousand impressions)?
Written and reviewed by L.K. Monu Borkala · Updated
Definition
CPM (cost per mille, or cost per thousand impressions) is the cost of showing an ad 1,000 times. It tells you how expensive it is to reach people on a platform or with a particular audience, whether or not anyone clicks. Advertisers on Meta and YouTube watch it closely to compare the cost of getting attention.
How it works
An impression is counted each time an ad is shown on a screen. CPM takes your spend, divides it by impressions and multiplies the result by 1,000. On Meta, most campaigns are charged by impressions, so CPM reflects how much competition there is for the audience you chose. It tends to rise in busy seasons such as Diwali, when many brands advertise at once. A very narrow audience or an ad that people ignore can also push CPM up. CPM measures the cost of reach, not results, so always read it together with CTR, CPC and conversions.
Formula
CPM = (Total ad cost ÷ Impressions) × 1,000
Example
Imagine a handloom store in Varanasi running an Instagram ad to women aged 25 to 45 in Uttar Pradesh. It spends ₹3,000 and gets 1,50,000 impressions, so its CPM is ₹20. The next month, with a much narrower audience of people interested in handloom sarees, CPM rises to ₹60, but sales improve because the people seeing the ad are more likely to buy. CPM alone did not tell the full story.
An illustration: the business and the rupee figures are made up to show how the idea works.
Common mistake
Celebrating a low CPM as success. Cheap impressions can come from audiences who never buy, or from placements where people scroll past quickly. Another mistake is mixing up impressions and reach. One person may see your ad three times, which counts as three impressions but a reach of one.
Where you learn it
- Module 1: Digital Marketing Foundations
- Class: Channels Overview: SEO, Social, Ads, Email, Content & Influencers · read it free
- Module 6: Meta Ads (Facebook & Instagram)
- Class: Budgeting & A/B Testing
Related terms
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