How to Calculate CPM: Formula and Examples | Points for Using It in Ad Design

A metric you can't do without when grasping the cost-effectiveness of web advertising is CPM. Especially in campaigns aimed at brand awareness and reach expansion, whether you can correctly calculate CPM and evaluate media and delivery settings has a major impact on results. This article explains how to calculate CPM with formulas and concrete examples, and covers the points to keep in mind when applying it to ad design, from a practical perspective.

What Is CPM? The Basics of Impression Cost

CPM stands for "Cost Per Mille" and is a metric that shows the cost incurred each time an ad is displayed 1,000 times. "Mille" means "1,000" in Latin. Because the number of times an ad is shown on a user's screen is called an "impression," CPM is also translated as "impression cost."

A characteristic of CPM is that cost is incurred for the "number of times displayed" regardless of whether the ad was clicked. As a result, it lets you visualize how many users you are reaching for the same ad spend, making it well suited to evaluating campaigns in the awareness-building phase.

How to Calculate CPM (The Formula)

CPM is calculated with the following formula.

CPM (currency) = Ad spend ÷ Number of impressions × 1,000

The key point is to multiply by 1,000 at the end. Because CPM represents the cost "per 1,000 impressions" rather than "per single impression," simply dividing ad spend by the number of impressions will not give the correct value.

CPM Calculation Examples

Example 1: Ad Spend of 10,000 yen, 50,000 Impressions

Let's calculate for a case with 10,000 yen of ad spend and 50,000 ad impressions.

CPM = 10,000 yen ÷ 50,000 impressions × 1,000 = 200 yen

In this case, a cost of 200 yen per 1,000 impressions is being incurred.

Example 2: Ad Spend of 300,000 yen, 1,000,000 Impressions

This is a case with 300,000 yen of ad spend and 1,000,000 ad impressions.

CPM = 300,000 yen ÷ 1,000,000 impressions × 1,000 = 300 yen

Even when the number of impressions is large, the formula is the same. To avoid mistaking the impression unit, make it a habit to first find "ad spend ÷ impressions" and then multiply by 1,000 at the end.

Working Backward from CPM to Ad Spend and Impressions

By rearranging the formula, you can also apply it to budget planning.

• Find the required ad spend: Ad spend = CPM × Number of impressions ÷ 1,000