Cost Per Thousand (CPM)

CPM stands for cost per thousand and is a metric used in webpage advertising. In an effort to attract customers, companies will pay for ad space on popular websites that are related to the product they are selling. Advertising companies charge per 1,000 impressions or displays of an ad. CPM-based advertising is used for brand awareness or to advertise specific messages. As an example, an ad company that charges $2 per CPM will earn $200 per client from 100,000 ad impressions.

CPM is related to CTR, which stands for click-through rate. CTR tracks the number of clicks per 1,000 ad impressions. Ad companies will often charge extra based on the number of CTRs. CTR doesn’t necessarily mean success for a client. A customer may not purchase anything after clicking on an ad while another customer may see an ad and decide to purchase days later by phone or by walking into the store.

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