Cost per Thousand Impressions

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Note: For CPM related to internet marketing, see Cost per impression

Definition

Cost per mille (CPM) or cost per thousand (CPT) is a "simple and widely used method of comparing the cost effectiveness of two or more alternative media vehicles. It is the cost of using the media vehicle to reach 1,000 people or households. The CPM of any vehicle is computed by dividing the cost of placing a specific ad or commercial in the media vehicle by the vehicle's audience size and multiplying the result by 1,000."[1] CPM is useful in comparing the relative efficiency of different advertising opportunities or media and in evaluating the costs of overall campaigns.[2]

Purpose

The purpose of the CPM metric is to compare costs of advertising campaigns within and across different media. A typical advertising campaign might try to reach potential consumers in multiple locations and through various media. The cost per thousand impressions (CPM) metric enables marketers to make cost comparisons between these media, both at the planning stage and during reviews of past campaigns. Marketers calculate CPM by dividing advertising campaign costs by the number of impressions (or opportunities-to-see) that are delivered by each part of the campaign. Thus, CPM is the cost of a media campaign, relative to its success in generating impressions or opportunities to see. As the impression counts are generally sizeable, marketers customarily work with the CPM impressions. Dividing by 1,000 is an industry standard.

Construction

To calculate CPM, marketers first state the results of a media campaign (gross impressions). Second, they divide that result into the relevant media cost:
      Cost per thousand impressions (CPM) ($) = Advertising cost ($) ÷ Impressions generated (#, in thousands)

See Also


References
  1. ^ American Marketing Association. Dictionary: Cost-per-thousand (CPM). <https://www.ama.org/resources/Pages/Dictionary.aspx?dLetter=C> [cited 16 February 2015.]
  2. ^ Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; and David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Second Edition). Upper Saddle River, New Jersey: Pearson Education, Inc. <http://www.amazon.com/Marketing-Metrics-Definitive-Measuring-Performance/dp/0137058292



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