Cost of Advertising: CPM, CPC, and CPM Demystified
Cost of Advertising: CPM, CPC, and CPM Demystified The purpose of this post is to clarify the terms CPM and CPC and also show how to convert from one model to the other. CPM CPM stands for Cost per 1000 Impressions (number of times the ad is shown) (M is Roman numeral for 1000). Generally, display advertising (e.g. banners) is sold in CPM. If the ad is shown 1000 times the cost will be equal to 1 CPM price. For example, if a publisher charges $10 CPM, that means your ad will be shown 1000 times for $10. If your budget is say $10,000 then mean your ad will be shown 1,000,000 times ($10,000 *(1000/$10) ). Total Impressions = (Total Cost or Budget) * (1000/CPM) If you are trying to find out how much you will pay for a given number of impressions then you can use the following formula Total Cost = (Total Impressions * CPM)/1000 If you notice in the above calculations, there are no mentions of how many people the ad will be shown to or how many clicks will be generated. CPM adverti...