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What is CPM?

Cost Per Mille. Usually reflects the price of 1000 banner impressions in dollar currency. Payment depends on the number of impressions solely.  For example, a banner is being shown 200,000 times at CPM of $0.5, means that the payment by the advertiser to the publisher would be 200,000 * 0.5 / 1000 = $100.

Advantages

  • The advertiser knows exactly how many times the banner will be shown, and what would be his daily / total costs.
  • Common model when buying media against a specific URL / site / ad spot.
  • CPM is being prioritized first by ad-networks since the publisher knows exactly what the expected revenue per impression is.

Disadvantages

  • Very weak performance matrix, very weak correlation with sales or leads.
  • No indications for the advertiser on banner, campaign or media quality.
  • When dealing with multiple sites or ad spots advertiser might receive cheap media instead of effective media.
  • Effective frequency capping is unknown.

Example:

Day 1 Day 2 Day 3
Impressions 200,000 150,000 200,000
CPM [fixed] $0.5 $0.5 $0.5
Cost $100 $75 $100