How to Calculate CPM

In the advertising world there are several methods that companies use in order to calculate the finances involved and the allocation of the advertising budget as well. It does not make sound financial sense to simply spend money on advertising without any limitations, so it is absolutely necessary to make a proper plan of the channels in which the money will be spent, and to also ascertain the sources of revenue and the manner in which it is distributed.

CPM used to be known as Cost Per Mille in the conventional advertising world, and in some cases, it still refers to that. But online advertising has now become the primary concern of many advertisers, and this is where this concept is most applicable today. In the online advertising world, CPM refers to Cost Per Thousand Impressions, and this is a means of calculating how much money is being spent on a specific campaign in order to complete 1,000 different actions.

The 'action' mentioned here differs from company to company, and from campaign to campaign. For advertisers who regularly indulge in outdoor advertising on a large scale, an action or an 'impression' can signify someone looking at the advertisement and making an inquiry about it. In the online world, an impression can mean clicking on the ad, or filling out a form, or recommending someone else's email address or actually buying a certain product or service.