Glossary
CPM
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CPM (cost per mille, from the Latin for thousand) is the price of 1,000 ad impressions, the standard unit in which display, video and most programmatic media are bought and sold.
The unit survives even where each impression is sold alone. In OpenRTB 2.6 the bid price is expressed as CPM although each transaction covers one impression, and floors use the same unit. The specification also recommends integer arithmetic for money, to avoid rounding errors (IAB Tech Lab, OpenRTB 2.6, section 4.2.3).
The formula is simple: cost equals impressions divided by 1,000, multiplied by the CPM. One impression therefore costs the CPM divided by 1,000. Variants adjust the denominator. A vCPM counts only viewable impressions, and an eCPM converts other pricing into a CPM so different deals can be compared. Video and audio deals can price per second with a CPM-per-second floor. In digital out-of-home, one play can count as many impressions through a multiplier.
CPM says nothing about outcomes on its own. A cheap CPM on low-quality inventory can cost more per sale than an expensive one on a page people read.
Example: A DSP wins 250,000 impressions at a clearing price of $3.20 CPM. Each impression costs $0.0032, and the campaign spends $800. If 40% of those impressions were viewable, the effective vCPM is $8.00. The CPM, CPC, CPA and vCPM converter runs the same sums.
Related terms: eCPM, vCPM, CPC, CPA, floor price, working media.