How CPM is calculated
CPM is the cost of a campaign divided by its impressions, multiplied by 1,000. An advertiser who pays $2,000 for 200,000 impressions has paid a $10 CPM.
For a publisher the formula runs the other way: revenue is impressions divided by 1,000, multiplied by CPM. 560,000 impressions at a $10 CPM earn $5,600.
From CPM to revenue per viewer
Impressions come from viewing. Multiply watch hours by ads per hour and by fill rate, the share of ad slots actually sold. A viewer who watches 10 hours a month at 8 ads an hour and a 70% fill rate sees 56 ads, worth 56 cents at a $10 CPM.
Use net CPM in planning: the rate after ad networks, sales partners and ad-tech fees have taken their share.
What moves CPM
- Audience: country, age and income; high-income markets command far more
- Screen: television generally earns more than mobile
- Targeting and data available to the advertiser
- Content: premium, brand-safe programming over user uploads
- How it is sold: direct deals above open programmatic auctions
- Season: demand peaks before year-end holidays and dips in January
CPM vs eCPM
CPM is the price of the ads that were sold. eCPM, effective CPM, is total ad revenue divided by all available impressions, sold or not, so it reflects fill rate as well as price. eCPM is the better measure of what your inventory really earns.
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