What is CPM & How Does CPM Bidding Work?

What is CPM?

CPM stands for “Cost per Mille”, which translates to cost per thousand impressions.

How Does CPM Bidding Work?

The CPM bidding model is most often used when investing in display, social, or media advertising. The goal should always be to set a CPM bid that optimizes you visibility within the constraints of your budget.

For example, you are about to begin running a Facebook campaign. You want your ad to reach 10,000 people per day, and you can spend up to $50 per day.

10,000 / 1,000 = 10
$50 / 10 = $5

CPM Facebook Example

Say you will be running another campaign in a few weeks. You want this ad to reach 20,000 people per day, but you’re only going to have up to $25 to spend per day.

20,000 / 1,000 = 20
$25 / 20 = $1.25

Alternatively, you can determine your CPM bid first to determine how much budget will be necessary to achieve a certain reach.

If you value 1,000 impressions at $7, your options look something like this:

$7 = 1,000 impressions
$35 = 5,000 impressions
$70 = 10,000 impressions
$350 = 50,000 impressions
$700 = 100,000 impressions

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