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CPM (Cost Per Mille)

CPM (Cost Per Mille) is a metric in digital advertising that represents the cost advertisers pay for one thousand impressions of their ad. 

It should be noted that different events may be considered as 'impressions':

  • Winning a programmatic auction: In some cases, especially in programmatic advertising, CPM can be calculated based on winning an auction, meaning the advertiser pays for the opportunity to display the ad, even if the actual display hasn't occurred yet.
  • Ad loading on a page: Another common scenario is calculating CPM based on loading an ad unit on a web page. This occurs when the ad is loaded in the user's browser, though it may not be visible within the screen's viewable area.

Formula:

Example:

If an advertiser spends $500 on a campaign that wins 100,000 auctions (irrespective of actual displays), the CPM is calculated as:

CPM = (500 / 100,000) × 1000 = 5 USD

This means the advertiser pays $5 for every 1000 won auctions or ad loads. 

CPM is used to assess the cost of advertising campaigns based on reach and ad visibility. However, since the calculation method can vary (from won auctions to actual visible impressions), it's important to consider the context of CPM usage when analyzing campaign effectiveness.