How CPM is calculated

CPM stands for Cost Per Mille (“mille” = one thousand). In marketing, it means: how much you pay to deliver 1,000 impressions. An impression is one ad view opportunity (often counted when an ad loads or is served, depending on the platform).

• CPM = (Total Cost ÷ Total Impressions) × 1,000

Example: If you spend $500 and get 100,000 impressions, then: 500 ÷ 100,000 = 0.005 per impression. Multiply by 1,000 → CPM = $5. This makes it easy to compare against another campaign that got 1,000,000 impressions.

• All‑in Cost = Spend × (1 + Fee% ÷ 100)
• All‑in CPM = (All‑in Cost ÷ Impressions) × 1,000

Why include fees? Many teams want a single “true CPM” that reflects what the business actually pays after platform fees, agency markups, creative services, or fixed management fees (when those fees scale with spend). You can set fee% to 0 if you’re looking at raw platform CPM.

• Viewable Impressions = Impressions × (Viewability% ÷ 100)
• vCPM = (All‑in Cost ÷ Viewable Impressions) × 1,000

Viewability matters because not every served impression was actually seen. If viewability is 60%, then only ~60 out of every 100 impressions were “viewable.” vCPM answers the tougher question: “What did I pay for 1,000 impressions that had a real chance to be noticed?” Lower viewability makes vCPM rise even if CPM stays flat.

CPM examples you can copy

These examples show how CPM behaves. Think of CPM like “unit price”: you’re dividing total cost by total units (impressions) and then scaling to 1,000 units.

• Spend: $1,000
• Impressions: 200,000
• CPM = (1,000 ÷ 200,000) × 1,000 = $5.00

• Spend: $1,000
• Fee%: 15%
• All‑in Cost = 1,000 × 1.15 = $1,150
• Impressions: 200,000
• All‑in CPM = (1,150 ÷ 200,000) × 1,000 = $5.75

• All‑in Cost: $1,150
• Impressions: 200,000
• Viewability: 70%
• Viewable Impressions = 200,000 × 0.70 = 140,000
• vCPM = (1,150 ÷ 140,000) × 1,000 = $8.21

Notice what happened: CPM stayed $5.75 all‑in, but vCPM jumped to $8.21 because only 70% of impressions were viewable. That’s why viewability can be a hidden “tax” on attention.

Turn CPM into decisions (not just a number)

CPM is most useful when you have to choose between multiple ways to buy attention. For example: two ad platforms, two publishers, or two sponsorship packages. CPM helps you compare “reach cost” apples‑to‑apples — but you still need context. Here’s a simple decision workflow.

• Use CPM to compare raw reach cost.
• Use vCPM when viewability varies across inventory (display/video, especially).

• Higher CPM can be fine if your targeting is tight (high intent audiences) or your placement is premium.
• Lower CPM can be misleading if the audience is broad, low‑attention, or traffic quality is poor.

• If you know CTR, you can estimate CPC from CPM: CPC ≈ CPM ÷ (1,000 × CTR)
• If you know CVR, you can estimate CPA: CPA ≈ CPC ÷ CVR
• If you know purchase value, you can estimate ROAS and decide if the CPM is “worth it.”

The key idea: CPM is the top of the funnel (attention). If you’re running a direct response campaign, CPM is only a starting point — your profitability comes from what happens after the impression. But even in performance marketing, CPM can reveal problems: rising CPM with flat CTR often signals creative fatigue, audience saturation, or increased auction competition.

Why CPM changes week to week

CPM isn’t a fixed price tag. It’s an auction or a negotiated rate that responds to supply and demand. If your CPM spikes, it doesn’t always mean you “did something wrong.” Here are the usual drivers:

• Audience: narrower targeting (job titles, high income, niche interests) often costs more.
• Geo: some countries/cities have heavier competition, raising CPMs.
• Seasonality: Q4 holiday demand often increases CPMs across many channels.
• Format: video/CTV placements typically price higher than simple banner impressions.
• Creative quality: better engagement can sometimes lower effective costs in auction systems.
• Brand safety & inventory: premium publishers and “safe” content can command higher CPMs.
• Frequency: showing ads repeatedly to the same people can increase costs (and reduce returns).

A useful habit: track CPM and vCPM together. If CPM is stable but vCPM worsens, the issue is often viewability, placement, or inventory quality rather than pure auction cost.

Frequently Asked Questions

• What is a “good” CPM?

  “Good” depends on your channel, audience, and goals. A $3 CPM might be great for broad display reach but unrealistic for premium video. Use CPM as a comparison tool: compare your CPM across creatives, audiences, placements, and time periods.

• Is CPM the same as CPC or CPA?

  No. CPM prices impressions. CPC prices clicks. CPA prices conversions. CPM is top‑of‑funnel; CPC and CPA depend on your CTR and conversion rate.

• Why does vCPM matter?

  If viewability is low, you might be “paying” for impressions that were never truly seen. vCPM adjusts for that by dividing by viewable impressions. It’s a better attention cost signal.

• Should I include agency fees in CPM?

  If you’re trying to compare suppliers or report “true cost to the business,” include fees. If you’re optimizing inside a platform and fees are fixed elsewhere, use raw CPM.

• How do I use CPM to estimate clicks?

  If you know CTR, estimate clicks = impressions × CTR. Then you can estimate CPC: CPC ≈ spend ÷ clicks. CPM helps you understand the cost to generate the impression pool.

• Why does CPM sometimes go up when performance improves?

  In auction systems, better engagement can win more auctions and expand delivery into pricier placements. Also, increased competition or seasonality can raise CPM even when your ads get better results.

Use CPM like a media buyer

• Compare CPM across the same objective (awareness vs conversion campaigns differ).
• Track frequency (high frequency can inflate CPM and hurt returns).
• Use vCPM when placements vary (display/video).
• Pair CPM with CTR, CVR, CAC, ROAS before making budget decisions.
• Watch for creative fatigue: CPM ↑ and CTR ↓ is a common early warning signal.

MaximCalculator builds fast, human‑friendly tools. Double‑check important decisions with your analytics and platform reporting.