WTF is a CPM? #mediamath

Photo: KnowYourMeme

One of the first things I was introduced to at the start of my career was Media Math- the bane of my existence, but one of the most important and necessary measures in digital advertising.  

So what is a CPM?  CPM stands for “Cost per Mille”.  Digital advertising is sold on a “Cost per 1,000 impressions”.  

So now, WTF is an impression?  An impression is just a fancy way of saying that someone saw or interacted with your stuff.  They visited your website, saw your ad, post, or engaged with your content online.

So basically in advertising we charge a certain dollar amount for every 1,000 times someone visited your website, saw your post, ad, or engaged with your content.  

There are 3 variables associated with CPM: Impressions, Revenue, and CPM. You just need 2 of the 3 variables to get your desired calculations.  Formulas are below: 

If you have impressions and revenue, but want the CPM: 

Impressions/Total Revenue x 1,000 = CPM

If you have the impressions and CPM, but want the revenue:

CPM/1,000 x impressions = Revenue 

If you have the revenue and CPM, but want the impressions:

Revenue/CPM x 1,000 = Impressions 

So an advertiser may charge a $40 CPM for every 1,000 times someone sees an ad.

You can do all the manual math using the formulas above, or you can be like me and skip all those manual calculations and use this handy CPM Calculator. If you have 2 variables you just plug them in.  You are welcome. 

I don’t know who came up with this stuff (I’m sure that I could Google it….but I digress) but it’s one of THE most important metrics in digital advertising, and how a lot of digital ads are sold.  There are also other metrics called “CPC” or “Cost Per Click”,  CPV or “Cost per page view”, and CPA or “Cost per Acquisition”—but I’ll save those for another post.