CPM formula to calculate your advertising budget

Below are the questions that answer essential questions about CPM. These questions would essentially try to explain the CPM formula that forms the basis of calculating the worth of a CPM campaign.

What is the full form of CPM?

CPM stands for Cost per thousand impressions. It could also be understood as a unit price per  thousand views that an advertisement gets.

What does it mean?

It is the amount that an advertiser would need to spend if they want their advertisement banner to be visible on a webpage a thousand times.

What is the CPM formula?

CPM formula calculates the total cost of a campaign when count of total impressions targeted in a campaign is multiplied by the cost of each thousand impression and divided by a thousand.

Who determines the unit price of a thousand impressions?

The price is generally quoted by online advertising agencies who do it on the basis of quality of websites and online properties that they have in their portfolio.

Can I control on which website my advertisement should be visible?

Please refer to the specific terms and conditions of the particular advertisement agency that you may have shortlisted.

The formula:-

Total campaign cost = ( Count of total impressions targeted x CPM ) / 1,000

Illustration:-

If you as an advertiser is targeting 1 million impressions for your campaign which has a CPM of 2 dollars, then the total cost of your campaign would be:

(1,000,000 x 2)/1,000 = $2,000

If you don’t want to bother with the mathematics part, click here for our CPM calculator that will calculate the campaign cost on the basis of number of views that you are targeting and the CPM as quoted by your advertisement agency.