What is CPM?
CPM, or cost per mille, is what you pay to have an ad shown one thousand times, whether or not anyone clicks it.
Formula
CPM = ad spend ÷ impressions × 1,000
Worked example, not a result
The same product, two audiences, two prices
Say a campaign spends 2,875 in a week and its ads are shown 250,000 times. CPM is 2,875 divided by 250,000, multiplied by a thousand, which is 11.50.
Split that by audience and it stops being one number. A broad audience of people who have never heard of the brand costs 6.40 per thousand impressions. A retargeting audience of people who viewed a product in the last few days costs 18.50, because far fewer of them exist and every advertiser who touched them is bidding for the same eyeballs.
The higher price is not automatically worse. Those expensive impressions are shown to people already close to buying, so the orders they produce can cost less even though each impression costs more. The cheap impressions look efficient right up to the point where you count the orders.
These figures are made up to show how to read the metric.
Why it matters
CPM is the entry price of the visitors lever on feed based platforms, where you pay for attention rather than for clicks. It sets the starting cost of every campaign, and it moves for reasons outside your control, such as how many advertisers are chasing the same people and how busy the shopping calendar is.
What you can control is what happens after the impression. If the creative earns more clicks and the landing page converts more of them, a rising CPM stops mattering, because the cost per order falls even as the cost of attention rises. That is why creative and page work belong in the same conversation as media buying.
For a store owner, CPM is the early warning. A steady climb through the autumn with no change in results is seasonal competition, and the answer is stronger creative or a higher order value rather than panic. A sudden jump on one audience usually means it is too small or too heavily used.
Common mistakes
- Judging a campaign by CPM alone. Cheap attention from people with no interest in the category is the easiest thing in advertising to buy and the least useful.
- Blaming the platform for seasonal rises. Costs climb when more advertisers compete for the same audiences, which is predictable and worth planning budget around rather than reacting to.
- Running audiences so small that price climbs on its own. A narrow list gets shown the same ads over and over, which pushes cost up and results down at the same time.
- Ignoring the creative when the price rises. Ads that earn attention are served more cheaply on most platforms, so tired creative shows up first as a rising cost of impressions.
Related terms and answers
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