Cost per thousand impressions (technically, “cost per mille”).
The CPM model refers to advertising bought on the basis of impression. This is in contrast to the various types of pay-for-performance advertising, whereby payment is only triggered by a mutually agreed upon activity (i.e. click-through, registration, sale).
The total price paid in a CPM deal is calculated by multiplying the CPM rate by the number of CPM units. For example, one million impressions at $10 CPM equals a $10,000 total price.
1,000,000 / 1,000 impressions = 1,000 units
1,000 units X $10 CPM = $10,000 total price
The amount paid per impression is calculated by dividing the CPM by 1000. For example, a $10 CPM equals $.01 per impression.
$10 CPM / 1000 impressions = $.01 per impression
This should not be confused with Pay per Click programs as under this model no 'action' needs to be undertaken.Tags: CPM