How to Calculate CPM and Understand Campaign Costs
Learn the cost per mille formula, how to interpret CPM benchmarks, and when to prioritise CPM over CPC or CPA.
Cost per mille (CPM) is one of the most widely recognised pricing models in digital advertising. It represents the price of one thousand ad impressions and is essential for media planners comparing inventory across placements or networks.
CPM formula refresher
The CPM formula is straightforward:
CPM = (Total Cost ÷ Impressions) × 1000
As an example, if you spent $1,200 on 480,000 impressions, the CPM would be:
CPM = (1200 ÷ 480000) × 1000 = 2.50
That means each thousand impressions cost $2.50.
When CPM matters the most
- Brand awareness campaigns: impression volume is the core goal, so CPM is a leading indicator of reach efficiency.
- Video and display campaigns: publishers often use CPM to price inventory across page views or completed plays.
- Benchmarking media partners: CPM gives a way to compare cost efficiency across channels with different delivery guarantees.
Next steps
Use the calculator on this site to run quick CPM checks before committing budgets. Pair CPM with metrics like click-through rate (CTR) and conversion rate to understand the full cost-to-outcome relationship. Continuous monitoring will reveal when CPM increases due to inventory scarcity or targeting shifts, allowing you to respond faster.