In Latin, “mille” means 1,000. In the advertising world, “cost per mille” or “CPM,” refers to the cost to display one ad to 1,000 viewers. It is such a standard measurement that marketers usually use this method to compare the cost of a variety of campaign ideas for the same product.
For Internet marketing, CPM becomes a “cost per thousand advertising impressions” tool. In this case, 1,000 actual impressions must be made. This is determined by dividing the cost of the ad by the number of actual impressions in thousands. By standardizing the method of comparison and sample size, Internet marketers can easily compare different campaigns across different media and make statistically sound decisions going forward.
Publishers use CPM to determine when to use what method to see ad space by calculating effective cost per mille (eCPM). As an example, imagine that you’re hosting ads for running shoes. You have two ads: one for “Runners’ Choice Shoes” and one for “Runners’ Dream Shoes.” After a week of comparison, you determine the most profitable variation when Runners’ Choice has an eCPM of $5 for its 10 clicks and Runners’ Dream has an eCPM of $25 for its 50 clicks. The publisher can now determine what the worth of his or space would be with CPM.
