How to Calculate CPM

When you use CPMs -- cost per thousand -- you can gauge the cost effectiveness of your marketing, whether your ad is on television, in a magazine, or on the internet.

Instructions

  • Step 1: Divide the cost of the ad by the quotient arrived at when you divided the number of impressions by 1,000. If the advertising rate is $150, divide 150 by 10 to get a CPM of $15. Once you have the CPM, you can check your budget to see whether or not your advertising opportunity fits your marketing plan.
  • FACT: As of 2010, 93 percent of Americans were reached by billboard advertising.
  • Step 2: Determine the cost of the media -- television commercials, billboards, internet ads, print ads. CPM doesn't distinguish between types of media.
  • Step 3: Divide the total number of impressions your ad will make by 1,000. If your ad will make 10,000 impressions, divide 10,000 by 1,000 to get 10.
  • TIP: Check the terms of your advertising agreement to find the total number of impressions you can expect your ad to get.
  • Step 4: Find the size of your target audience. If you expect to reach 10,000 people with your ad, then 10,000 is the size of your target audience.

Popular Categories