CPM stands for "Cost per Mille" (also known as "Cost per Thousand"), which is a metric used in advertising to measure the cost of reaching one thousand impressions or views of an advertisement. In other words, CPM represents the cost that an advertiser pays for every one thousand times their ad is displayed or viewed by users.
CPM is often used in online advertising, particularly for display and banner ads, where the ad is shown on a webpage and the advertiser pays based on the number of impressions or views. The cost per impression is determined by dividing the total cost of the advertising campaign by the number of impressions, then multiplying by one thousand.
For example, if an advertiser pays $10,000 for a campaign that generates 1 million impressions, the CPM would be calculated as follows:
CPM = ($10,000 / 1,000,000) x 1,000 = $10
This means that the advertiser paid $10 for every one thousand impressions or views of their ad.
CPM is commonly used as a benchmark for comparing the cost-effectiveness of different advertising campaigns or channels, and can be used to estimate the cost of future campaigns. However, it should be noted that CPM alone does not take into account other important metrics such as click-through rates or conversions, which can also impact the overall effectiveness of an advertising campaign.
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