Cost Per Thousand

Cost per mille or thousand (CPM) is a commonly used measurement in advertising to value advertising based on reach and viewership. Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of what it costs to show the ad to one thousand viewers (CPM).

It is used in marketing as a benchmark to calculate the relative cost of an advertising campaign or an ad message in a given medium. Rather than an absolute cost, CPM estimates the cost per 1000 views of the ad. The lower the CPM, the better the value for the advertiser.

CPM is a very useful way of comparing advertising rates where the reach and viewership of channels is not the same. In determining CPM, viewership is the most important matter and drives the final CPM.

You can work out CPM based on spot price or total cost of the campaign.

CPM comparison based on variation in market share and price

Channel X initially appears more expensive due to the higher spot rate, but by taking into account the viewership, the cost per thousand is substantially less.

CPM comparison based on variation in market share

Channel X and Y offer the same spot price, but with higher viewership, Channel X is substantially cheaper than Channel Y on a CPM basis.