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Cost-per-thousand impressions (CPM) is a vital component of any paid media plan. Cost-per-thousand impressions is how much ad spend it takes to purchase 1,000 ad impressions. This can be calculated and analyzed at the aggregate level by evaluating the CPM of the total advertising spend, or analyzed by zooming in on a specific channel and tactic.
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Calculate your CPM by using your ad spend and the total number of impressions served.
Digital Marketing Terms, Acronyms, Calculations and Formulas
Spend: Spend is the net advertising cost. This does not include management fees, creative or anything else - purely the advertising hard cost.
Impressions: Impressions are the amount of times ads appeared, or were shown, in the given channel. Essentially how many ads were served by the advertising spend.
Cost-per-thousand Impressions (CPM): CPM is how much it costs in net advertising spend to purchase 1,000 impressions. ((Spend / Impressions)*1000) = CPM
Click-through Rate (CTR): CTR is the rate at which impressions result in a viewer of the ad clicking on it. If 100 ads are shown and 1 person clicks, that is a 1% CTR. Clicks / Impressions = CTR
Clicks: Clicks are the amount of people who clicked on, or took an action on an ad. The click metric is also commonly associated with the number of website visitors.
Cost-per-click (CPC): CPC is the average amount paid in advertising spend per click on the ad. Spend / Clicks = CPC
Conversions: Conversions - which could be sales, leads, downloads, email opt-ins - is the total volume of conversion actions attributed to the ad spend.
Conversion Rate: Conversion rate is the rate at which a click turns into a conversion action such as a lead form submission, ebook download, email opt-in, sale, etc. Conversions / Clicks = Conversion Rate
Cost-per-conversion: Cost-per-conversion - often referred to as cost-per-acquisition (CPA) - is the average amount of advertising spend invested per resulting conversion action. Spend / Conversions = Cost-Per-Conversion
Return on Ad Spend (ROAS): ROAS is a measurement of how much revenue is returned per dollar spent. This can be expressed as a percentage, or a dollar amount. Revenue / Spend = ROAS
Markup: Markup is the difference in price between what a business pays for a product (cost) and what a buyer pays for that same product. Markup is based on the cost of goods paid by the business. Markup is the net revenue amount the business will keep.
Margin: Margin is the difference in price between what a business pays for a product (cost) and what a buyer pays for that same product. Margin is the gross revenue percentage the business keeps.
