We perform the calculation and determine that this ad will cost us $20. Through secondary research on the Internet, we discover this equals 807,000 readers each week. Our next task is to divide this figure by the promotional vehicle’s target audiences’ claimed readership. Next, we then multiply this figure by 1000, which gives us the figure of $16.3 million ($16,300,000). In this example, we’ll presume the cost of the campaign is $16,300. Let’s say we wish to calculate the CPM for a Woman’s Day magazine advertisement. In other words, the CPM measures cost, not performance. CPM formula exampleīefore we begin, it’s crucially important to remember that the CPM formula does not consider the marketing message’s effectiveness.
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The example below illustrates how to calculate the CPM for a magazine print advertisement. The benefits of calculating a campaign’s CPM are particularly useful in the sense that various mediums can be evaluated against each other for their relative affordability. On a global scale, the CPM formula is the most widely used efficiency indicator for this purpose – across all mediums – including print, broadcast, outdoor, and of course, digital. So they assign appropriate metrics to gauge performance. Of course, the only accurate way this can be performed, is by way of measurement. In the same way small business managers monitor their overheads to ensure operating efficiency is achieved, the clever ones also insist that their promotional activities perform cost-efficiently. It does not measure the effectiveness of the promotional activity.
The CPM formula measures the cost in terms of efficiency. Because of this, and for obvious reasons, it is sometimes called the CPT formula. The CPM formula acronym represents cost per mille, with mille meaning thousand by Latin definition. Most commonly, the marketing and advertising industries use the CPM formula to compare the cost of each promotional medium.
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