Cost per thousand impressions (CPM) is what an advertiser pays, or effectively pays, for 1,000 showings of an ad. The M is the Roman numeral for a thousand, which is why it is also called cost per mille. If £60 buys 40,000 impressions, the CPM is £1.50.
How CPM works
The formula is cost divided by impressions, multiplied by 1,000. Every campaign has a CPM you can calculate, whatever you are billed for. A search campaign paid per click still has an effective CPM, which is handy for comparing channels on the same footing.
In Google Ads, some formats are bought on impressions directly. Bumper ads and non-skippable in-stream ads on YouTube use Target CPM bidding, where Google aims for an average price per thousand impressions. Display campaigns that offer it can bid on viewable CPM, which charges only for impressions where at least half the ad was on screen for one second, or two seconds for video. On Meta, campaigns aimed at awareness or reach are judged largely by CPM.
CPM rises and falls with demand. More advertisers chasing the same audience pushes prices up, so CPMs often climb in the run-up to Black Friday and Christmas and ease in January. Narrow audiences, premium placements and valuable targeting, such as people actively shopping for a product, usually cost more per thousand than broad audiences.
Why it matters
For awareness work, CPM tells you how much attention you are buying. A UK brand launching in a new region may care mainly about how many local people saw its video a few times, and CPM is the most direct price for that.
But an impression is neither a person nor an outcome. A cheap CPM can mean the ads ran where nobody was looking: at the bottom of low-quality pages, or in mobile games where taps are accidental. So CPM is a cost input, to be judged against what the impressions produced, whether that is reach, video views, site visits or eventually sales.
Common mistakes
- Picking the campaign with the lowest CPM without checking where the ads appeared. Placement reports and content suitability settings show and control this.
- Comparing CPM across platforms as if every impression were equal. A full-screen video and a small banner at the foot of a page are different things.
- Expecting an impression-bought campaign to deliver sales at the cost per acquisition of a search campaign.
- Ignoring frequency. A low CPM spent on the same few thousand people soon becomes irritating rather than persuasive.
- Treating a CPM jump in late November as a fault rather than seasonal competition.
How to act on it
Decide what the impressions are for before you look at the price. If the aim is awareness in a defined area, track CPM together with unique reach and frequency, and check placements weekly in the early stages. If the aim is action, judge the campaign on cost per visit or per conversion and treat CPM as background.
Plan budgets with seasonal swings in mind, and keep testing creative, because ads people engage with tend to win cheaper impressions on auction-based platforms. The reach and frequency calculator turns a budget and a CPM into a rough estimate of how many people you might reach. Planning video spend this way is part of my YouTube advertising work.