What is CPM in TV Advertising

Cost per thousand, or Cost per Mille (as it’s officially known), is a term to indicate the price of 1,000 advertisement impressions. In TV advertising measurement, one impression would refer to one individual exposure and time in which a single user was exposed to an advertisement, and each subsequent exposure is a new, additional impression. The advertising cost is the total budget spent on a given campaign. So, the CPM can be calculated with a simple formula:

(Advertising cost / Impressions generated)*1000 = CPM

CPM measurement considers impressions by the thousand as a shorthand given the sizable reach of most television campaigns. CPM in advertising is considered an advertising measurement benchmark that is standardized across the industry.

Brands use CPM tv advertising trends to measure the effectiveness of advertising campaigns and various stages of deployment, and to compare success against previous campaigns. Since impressions are the precedent to conversion and revenue, measuring impressions can serve as an indicator of generating sales. Different advertisers have different predictions for how CPM should reflect revenue. Their predictions could be based on myriad factors, such as product type, the market, their target audience makeup and company sales goals against previous quarters.

Typically, CPMs tend to be higher in CTV ad campaigns because the inventory is more limited than with linear TV, and thus competition for slots is more aggressive. The limited nature of inventory is no longer really the rationale behind the premium cost; more so, it is that there is incremental cost for each level of targeting, demo, psychographics, etc.