Cost Per Mille (CPM)

What is Cost Per Mille (CPM)

Cost Per Mille (CPM) is a standard pricing metric in streaming TV advertising, representing the cost an advertiser pays for every 1,000 ad impressions. The term “mille” comes from Latin, meaning “thousand.” This metric is widely used to measure the cost-efficiency of ad campaigns and compare pricing across different streaming platforms and audience segments.

How CPM is calculated

The formula for CPM is straightforward:

CPM = (Total Ad Spend / Total Impressions) × 1,000

For example, if an advertiser spends $10,000 on a campaign that generates 2 million impressions, the CPM would be $5.

Types of CPM in streaming TV

CPM rates can vary based on targeting, bidding, and market conditions. Some common variations include:

• Flat CPM, where advertisers pay a fixed rate regardless of audience specifics.
• Dynamic CPM, where pricing fluctuates based on real-time demand.
• Targeted CPM, which comes at a premium for reaching specific audience segments.
• Programmatic CPM, where automated bidding determines the final cost.
• Geographic CPM, where rates change based on the viewer’s location.

Why CPM matters in streaming TV advertising

CPM is a key consideration when planning a streaming ad campaign. It helps advertisers determine budget allocation, campaign performance, and overall return on investment (ROI). Since streaming platforms offer highly targeted ad placements, CPM rates tend to be higher than those of traditional TV. However, the ability to reach specific audiences with measurable engagement often justifies the cost.

Factors that influence CPM rates

Several factors impact how much an advertiser pays per 1,000 impressions. Audience targeting plays a major role—ads served to highly specific demographics usually come with a higher price tag. Content quality, ad format, and platform popularity also contribute, as premium content and high-demand platforms often command higher CPMs. Additionally, time of day and seasonality can affect costs, with peak viewing hours and major events typically driving up prices.

Related advertising metrics

CPM is just one piece of the puzzle. Advertisers also track:

• eCPM (Effective Cost Per Mille), which reflects actual revenue per 1,000 impressions.
• CPCV (Cost Per Completed View), measuring the cost of fully watched ads.
• VCR (Video Completion Rate), which indicates how many viewers watch an ad to the end.
• GRP (Gross Rating Points), a metric used to measure overall ad impact.

Optimizing CPM for better ROI

To get the most value from a CPM-based campaign, advertisers should continuously analyze performance data, experiment with different audience segments, and balance reach with frequency. Programmatic buying can help optimize pricing, while strategic dayparting (targeting specific times of day) can improve efficiency.

The bottom line

In streaming TV, CPM is an essential metric for advertisers looking to balance cost and impact. While CPM rates are often higher than in traditional TV, they typically lead to better audience engagement, more precise targeting, and stronger ROI.

Want to dive deeper? Check out related terms like eCPM, CPCV, and programmatic advertising.