# CPM (cost per thousand impressions)

URL: https://tnb-tech.com/en/glossary/cpm/

## What is CPM (cost per thousand impressions)?

CPM, or cost per thousand impressions, is what an advertiser pays for every thousand times an ad is shown: spend divided by impressions, multiplied by a thousand. It is how Meta, Google Display and YouTube price reach, because the billing event there is the impression, not the click. CPM tells you what attention costs in the auction; it says nothing about whether anyone bought.

**Example**

A children’s shoe shop runs a two-week campaign on a €400 budget. The report shows 250,000 impressions and 90,000 people reached. CPM = 400 / 250,000 × 1,000 = €1.60, and the average person saw the ad 2.8 times (250,000 / 90,000).

Those impressions produced 3,000 clicks, a clickthrough rate of 1.2%. Cost per click is 400 / 3,000 = €0.13, and 60 orders came out of it — €6.67 of ad spend per order. A second campaign on the same budget reports a CPM of €1.10 and looks cheaper: roughly 364,000 impressions, but only 1,800 clicks and 24 orders, which is €16.67 per order. The lower CPM bought cheaper attention from less relevant people.

**Why it matters for a business**

CPM is the price of the raw material, which is attention. When it climbs there are usually three suspects. The season has raised competition in the auction, and November and December are usually the most expensive weeks of the year. The audience is narrow and running out, so the system pays more for each further impression. Or the creative has worn out and is served less often for the same money.

CPM on its own is not a target. Cost per order is the target, and CPM explains where a change in it came from. A campaign with an excellent CPM and no sales is an expensive way to be seen by the wrong people.

**What to ask**

- Which period and which audience is this CPM compared against — last week, or the same month last year?
- Are the impressions viewable, or merely served? Google Display reports viewable impressions separately.
- What is the frequency? Past a certain point the same people see the ad again, CPM rises and results fall.
- Did the cost per order move because CPM moved, or because the conversion rate on the site moved?We read CPM, frequency and cost per order together in the monthly report for social media management.

- Services: [Social media management](https://tnb-tech.com/en/services/social-media-management/)
- Glossary: https://tnb-tech.com/en/glossary/