What you pay for every 1,000 times your ad is shown. Mille is Latin for thousand. It is the usual price of attention on Meta, YouTube and display.
Formula
CPM = ad spend ÷ impressions × 1,000
Example
Meera spends ₹60,000 on Instagram in a month and her ads are shown 6,00,000 times. Her CPM is ₹60,000 ÷ 6,00,000 × 1,000 = ₹100.
How you'll hear it
“CPMs on Instagram went up this week, so the same budget is buying fewer impressions.”
What it helps you decide
Which placements, audiences or time periods give you attention at a sensible price, and how much reach a given budget will buy. Always read it with CTR, because cost per click = CPM ÷ (1,000 × CTR).
Where people misread it
Picking the placement with the lowest CPM. Cheap impressions are often cheap because few people notice or act on them. A low CPM with a very low CTR can produce a higher cost per click than a pricier placement.
The story
Meera's Instagram ads run at a CPM of ₹100 and a CTR of 1% (Placement A). Her report shows another group of placements at a CPM of only ₹40 (Placement B). She wonders whether to move everything to the cheaper one.
| Placement A CPM | ₹100 |
| Placement A CTR | 1% |
| Placement A clicks | 10 |
| Placement A cost per click | ₹10 |
|---|---|
| Placement B CPM | ₹40 |
| Placement B CTR | 0.2% |
| Placement B clicks | 2 |
| Placement B cost per click | ₹20 |
What looks right: Placement B is 60% cheaper per thousand impressions.
What it hides: people barely engage there. Two clicks per thousand impressions make each click cost ₹20, twice the ₹10 on the 'expensive' placement.
What to look at instead: CPM together with CTR, and then cost per order. CPM tells you the price of being seen, not the value of it.
All figures for Meera's store are fictional and for illustration only.
Work out your CPM, CTR and cost per click
The example's numbers are filled in. Replace them with yours.
Compare placements on cost per click and cost per order, not on CPM alone.
Don't confuse it with
Related terms
Want to use this at work? AI-led PPC Excellence is aFactor's 16-week program for paid ads.
Sources
- Cost-per-thousand impressions (CPM): Definition, Google Ads Help
- Impressions: Definition, Google Ads Help