What is the CPM? Explanation using YouTube as an example

Online advertising is a billion-dollar business with its own rules and special vocabulary. Among the most important terms is CPM. We explain what the metric means and why it's so important on platforms like YouTube.

The CPM is the price required for a thousand contacts in online advertising.

Advertisers just like advertisers are imperative to an understanding of metrics such as the CPM.

What is the CPM and how is it calculated?

CPM is the abbreviation of "Cost per Mille". In German, the term Tausenderkontaktpreis (TKP) is more common. As a billing method, CPM thus makes an important statement:

• It indicates the investment required to reach a thousand recipients.
• In the case of YouTube, these are video viewers. Advertisers pay channel operators a fixed price per thousand viewers that a video records.
• The formula for CPM calculation is: ad price / reach x 1,000 = CPM
• A simple calculation example: At an ad price of 100 euros, a video with 100,000 views has a CPM (or CPM) of one euro.
• It does not matter how many viewers have actually clicked on the ad. The CPM is thus the opposite of the CPC (cost per click).
• The amount of the CPM can be very different and depends on many factors. A CPM of 30 cents is just as possible as a CPM of 30 euros.
• In detail, there are further distinctions such as gross and net CPM, which is about the fact that a user can be responsible for several calls.

Since the CPM as a quantitative value is independent of user engagement, it is particularly suitable for improving brand awareness and visibility. Für Conversions dagegen ist CPC (Cost per Click) als qualitative Kennzahl die bessere Wahl.