CPM
Cost Per Mille (mille meaning one thousand in Latin) is the cost an advertiser pays for one thousand ad impressions. It is the standard pricing model for display, video, and programmatic advertising. CPM is calculated by dividing total ad spend by total impressions and multiplying by 1,000. Average CPMs range widely: social media display ads cost $5-$12, YouTube pre-roll averages $10-$30, and connected TV campaigns can reach $25-$50. CPM is most useful for comparing reach efficiency across channels and formats when the primary goal is brand awareness rather than direct response.
Why It Matters
CPM is the standard pricing metric for awareness campaigns where the goal is maximum reach rather than immediate clicks. Comparing CPMs across platforms helps advertisers find the most cost-effective channels for brand visibility. However, a low CPM is only valuable if the impressions reach relevant audiences. Effective CPM (eCPM) adjusts for targeting precision by factoring in engagement or conversion rates, revealing the true cost of reaching qualified prospects. Advertisers should monitor CPM trends seasonally, as Q4 holiday demand can inflate CPMs by 30-50% across major platforms, requiring adjusted budgets and earlier campaign launches to maintain reach goals.
Example
A skincare brand runs display ads at a $6 CPM on the Google Display Network with a $12,000 monthly budget, serving 2 million impressions. On Instagram, the same audience costs $10 CPM, reaching only 1.2 million impressions. However, when the team analyzes engagement, Instagram drives a 1.8% click-through rate versus 0.3% on display. The effective cost per engaged user is $0.56 on Instagram versus $2.00 on display. The brand shifts 40% of display budget to Instagram, reducing total reach by 15% but increasing site visits by 60% and improving brand lift survey results by 22%.
Related Terms
CPC
Cost Per Click is the price an advertiser pays each time a user clicks on their ad. It is the dominant pricing model in search advertising and is also used in social and display campaigns. CPC is determined by an auction system where advertisers set maximum bids, but actual costs depend on competitor bids and quality factors. Average CPCs vary dramatically by industry: legal keywords can exceed $50 per click, while retail averages $1-$2. On Google Ads, actual CPC is typically 20-50% below the maximum bid due to the second-price auction mechanism.
Impression Share
The percentage of total available impressions that your ads actually received in a given time period. Google Ads breaks this into two sub-metrics: impression share lost to budget (your budget ran out before all eligible auctions completed) and impression share lost to rank (your Ad Rank was too low to compete). Impression share is reported at the campaign, ad group, and keyword level. A 100% impression share means your ads appeared for every eligible search. For branded keywords, top advertisers typically target 90-95% impression share, while non-branded campaigns often operate at 40-70%.