Cost Per Thousand (CPM) is a common metric used in advertising to denote the cost of 1,000 impressions of an advertisement. The term “M” in CPM stands for the Roman numeral for 1,000. CPM is often used in the context of display advertising, where advertisers pay for the number of times their ad is displayed or viewed by users, regardless of whether or not users click on the ad.

The formula to calculate CPM is:

\[ \text{CPM} = \frac{\text{Cost of Advertising}}{\text{Number of Impressions} / 1000} \]

Here are key points to understand about CPM:

1. **Payment for Impressions:** Unlike Cost Per Click (CPC), where advertisers pay for each click on their ad, CPM involves paying for the number of times an ad is displayed or viewed (impressions). Advertisers pay a fixed rate for every 1,000 impressions.

2. **Common in Display Advertising:** CPM is a common pricing model for display advertising on websites, mobile apps, and other digital platforms. It is often used when the primary goal is to increase brand visibility and exposure.

3. **Ad Auctions:** In online advertising platforms that use auctions, advertisers bid for ad placements based on CPM. The advertiser willing to pay the highest CPM often gets a higher position or more prominent display for their ad.

4. **Brand Awareness:** CPM is particularly relevant for advertisers focused on brand awareness and visibility. It allows them to reach a large audience, even if users don’t necessarily click on the ad.

5. **Viewability Concerns:** While CPM measures the cost per thousand impressions, it does not guarantee that users are actively engaging with or noticing the ad. Advertisers may also consider metrics like click-through rate (CTR) or engagement metrics to assess the effectiveness of their campaigns.

6. **Comparisons Across Platforms:** CPM allows advertisers to compare the cost of advertising on different platforms based on the cost of reaching 1,000 impressions. This can be useful for budget planning and campaign optimization.

It’s important to note that CPM is just one of several pricing models in digital advertising, and the choice of the right model depends on the advertiser’s goals and the nature of the advertising campaign. Advertisers may also use additional metrics, such as Cost Per Click (CPC), Cost Per Acquisition (CPA), or Return on Ad Spend (ROAS), to evaluate the overall effectiveness and performance of their campaigns.