The Programmatic Glossary
A practical glossary designed to help marketers, advertisers and ad-tech professionals understand the terminology that powers programmatic advertising
Measurement & Analytics
Cost Per Mille (CPM)
CPM (Cost Per Mille) is the price paid for 1,000 ad impressions. The word "mille" is Latin for one thousand. If an advertiser pays $5 CPM, they pay $5 every time their ad is shown 1,000 times. CPM is the standard pricing metric for display and video advertising.
HOW IT WORKS
CPM is calculated using the following formula: CPM = (Total Cost ÷ Total Impressions) × 1,000. Publishers and DSPs (Demand Side Platforms) use CPM as the benchmark for buying and selling inventory. In RTB (Real-Time Bidding) auctions, bids are submitted as CPM values. The winner pays their bid price in a first-price auction or just above the second-highest bid in a second-price auction.
EXAMPLE
An advertiser spends $500 and receives 200,000 impressions. CPM = (500 ÷ 200,000$) × 1,000 = $2.50 Premium content publishers might command CPMs of 15–30+$, while open exchange inventory might trade at $0.50–2
RELATED TERMS
Impression | Fill Rate | Bid Floor | Viewability | Click-Through Rate (CTR)
