Mastering the Metrics: Cost Per Thousand Impressions (CPM)
In the first installment of this series, we defined impressions and explained their usefulness. A related metric is Cost per Thousand Impressions (CPM), which helps you figure your cost per advertising expenditure. This measurement relates to web traffic and approximates the your cost per thousand ad views (total impressions).
Calculating this metric on a per-thousand basis (rather than expressing the figure as a cost-per-impression) makes more sense because you’re dealing with dollar figures, which are easier to conceptualize when they’re whole (not fractional) dollar amounts. For example, saying you have a CPM of $3 really means that each time the page loads and the ad is viewed, it costs you 0.3 cents ($0.003). It’s just easier to express this concept as CPM of $3.
Advertising Cost / # of Impressions (1000s) = CPM
