CPM stands for “Cost Per Thousand” (with “M” representing the Roman numeral for 1,000). It’s a metric used in advertising to denote the cost of 1,000 impressions or views of an ad. For example, if a website charges a CPM of $10, an advertiser would pay $10 for every 1,000 times their ad is shown.

Why is CPM What It Is?

The CPM rate is influenced by several factors:

  1. Audience Size and Quality: Platforms with a larger or more targeted audience can command higher CPM rates. Premium audiences (e.g., high-income or niche markets) often attract higher rates.
  2. Ad Format: Different ad formats have varying levels of engagement and effectiveness. Video ads typically have higher CPMs than display ads due to their higher engagement rates.
  3. Platform Popularity: Platforms like YouTube and Facebook, which have massive user bases, can command higher CPMs.
  4. Ad Placement: Ads placed in premium positions (e.g., above the fold on a webpage) usually have higher CPMs.
  5. Demand and Competition: High demand for ad space can drive up CPM rates. For example, CPM rates tend to be higher during peak advertising seasons like holidays.
  6. Targeting Capabilities: More advanced targeting options (e.g., demographic, geographic, behavioral) can increase the CPM as advertisers are willing to pay more to reach their desired audience precisely.

Why is CPM the Preferred Term?

CPM is a preferred metric in the advertising industry for several reasons:

  1. Simplicity: CPM provides a straightforward way to compare costs across different media and platforms, making budgeting and planning easier.
  2. Standardization: Using CPM allows for a standard measure across diverse advertising channels, from digital to traditional media.
  3. Scalability: CPM can be easily scaled up or down to reflect different campaign sizes and budgets.
  4. Focus on Reach: CPM focuses on the number of impressions, making it useful for brand awareness campaigns where the goal is to reach as many people as possible.
  5. Flexibility: CPM can be applied to various ad formats and platforms, providing a versatile metric for advertisers.

The cost per thousand (CPM) varies widely depending on the platform, audience, and ad format. Here’s a general overview of the industry norms for CPM across different online formats and legacy media:

Online Platforms

  1. Display Ads
    • General websites: $1 – $3
    • Premium websites: $10 – $30
  2. Social Media Ads
    • Facebook: $5 – $12
    • Instagram: $5 – $15
    • Twitter: $6 – $12
    • LinkedIn: $6 – $12
  3. Video Ads
    • YouTube: $10 – $30
    • Other video platforms: $15 – $25
  4. Search Ads
    • Google Ads: $1 – $2 for display network, $1 – $3 for search network

Legacy Media

  1. Television
    • National TV: $20 – $40
    • Local TV: $5 – $20
  2. Radio
    • National: $10 – $20
    • Local: $5 – $10
  3. Print Media
    • Magazines: $10 – $20
    • Newspapers: $5 – $15
  4. Out-of-Home (OOH) Advertising
    • Billboards: $3 – $10
    • Transit ads: $5 – $15

These CPM ranges are averages and can vary significantly based on factors like targeting, ad quality, and market demand.