What is CPM and How Does the Formula Work?

CPM stands for Cost Per Mille ("mille" is Latin for thousand). It is the standard metric used in online advertising—including Google Ads, Meta Ads, and programmatic display networks—to measure the cost of displaying an advertisement 1,000 times.

The standard mathematical formula to calculate CPM is:

CPM = (Total Cost / Total Impressions) × 1,000

Media buyers also use inverse formulas to estimate potential ad volume or budget requirements:

  • Calculate Required Budget: Cost = (Impressions / 1,000) × CPM
  • Calculate Expected Reach: Impressions = (Cost / CPM) × 1,000

Connecting Ad Traffic to Conversions

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