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 mille 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 the number of impressions.
1. How to calculate CPM
The formula for CPM is as simple as the concept behind it. Since CPM is the 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 the 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 the 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 they have to rely on the advertiser's ability to monetize the traffic.
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How do you calculate CPM – cost per mille?
- Check the advertising campaign price – the total billed price.
- Review the number of views the campaign got. Express the views in thousands (divide the total views by 1000).
- Divide the total price by the number of thousand views you got. Congrats, now you have your CPM.
What is a good CPM?
It depends on the industry where your business is. Try to find the average and aim to stay below it. The proper way to do it is by increasing the views on your ads. A good CPM is below the average of its industry.
What is a bad CPM?
A bad CPM is one that is above its industry average and even growing. The problem here is that you are paying more to get views for your ad. All downstream metrics such as CPC (cost per click) will increase, too, affecting your margins.
How to improve CPM?
Here we are going to give three recommendations for improving your CPM:
- Select your audience carefully.
- Make your posts more engaging. What about adding questions?
- Try different social media apps. Facebook is not the only one.
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