CPM (Cost Per Thousand)

CPM is a dollar figure used to evaluate the relative costs of various media or media vehicles within a selected audience criterion--e.g., cost per thousand circulation, cost per thousand homes, cost per thousand young housewives, cost per thousand impressions, cost per thousand direct mail pieces.

In other words, it is the advertising cost to reach 1,000 units of audience. 

BTW, the 'M' in CPM stands for 'mille' which is the French word for 'thousand.'

How to calculate CPM:

To figure the cost per thousand you need to know the cost of the media and the size of your target audience.

Suppose the size of your target audience is 156,800 and the cost of reaching them with an online ad is $892.

1. Divide the target audience by 1000
   • 156,800/1000= 156.8
2. Divide your advertising cost by 156.8
   • $892/156.8 = $5.69

Your advertising cost for every 1000 people is $5.69, or, in other words, a CPM of $5.69.

CPM helps in making an 'apples to apples' comparison of differently priced media and differently sized target audiences. However, be sure to take into account other relevant costs such as production, delivery, and creative costs, as well as projected response or other objectives to obtain a true comparison.

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