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