CPM calculator helps compute a basic task for online marketers and publishers. Knowing how to calculate CPM comes into play when advertising budgets are considered. CPM is shorthand for cost per mile or cost per thousand and is a common measure of volume in advertising. This calculator works either way, so it may be used to calculate either the cost, CPM or number of impressions. If you'd like to combine it with cost per click, use our CPC and CPM calculator. Online marketers also love the online conversion calculator (check it out, it's a powerful tool!).
How to calculate CPM
The formula for CPM is as simple as the concept behind it. Since CPM is cost per thousand impressions, then you simply divide the cost by the number of impressions divided by a thousand. So the CPM formula is
CPM = 1000 * cost / impressions. What may interest you more is one of the reversed equations:
- for cost (how much you'll have to pay):
cost = CPM * impressions / 1000
- for impressions (how many impressions you're going to get, given your budget):
impressions = 1000 * cost / CPM
The CPM model has a virtue of being very simple (in all regards - how easy it is to understand, implement and bill) and clear to all parties. It has its disadvantages, though. It's loosely tied to value, so advertisers can't be sure how much value they're getting. It's hard to tell how well the traffic will convert and no CPM calculator will tell you that. You get a bit closer if you're basing the remuneration on clicks (the CPC - cost per click model). Then you pay for actual traffic you're getting and it's up to you how much value you'll extract out of it.
Even less risky is the CPA (cost per action) model, where the advertiser pays every time the user performs an action (registers, makes a purchase, etc.). It's risky for the publisher, though, because he has to rely on advertiser's ability to monetize the traffic.