Stands for “Cost Per 1,000 Impressions,” and is used in online advertising. CPM defines the cost an advertiser pays for 1,000 impressions of an advertisement, such as a banner ad or other promotion. An impression is counted each time an advertisement is shown.
While some advertisers pay publishers an amount based strictly on impressions, most advertisers pay for individual clicks or leads generated from their advertisements. Therefore, in Web advertising, it may be more effective to measure pay per click (PPC) or pay per lead (PPL) rates. Either way, the advertiser’s goal is to generate as many leads as possible by keeping the rates as low as possible.
Web publishers also use the CPM to measure the revenue per 1,000 impressions. While technically this should be “revenue per 1,000 impressions,” or RPM, the terms CPM and RPM are often used interchangeably from the publisher’s perspective.