CPM stands for Cost for thousand impressions. Usually advertising networks like Google AdWords, Facebook, MSN Ad Center and many others offer advertising in the form of CPM or CPC basis. That means, if you want to buy a banner ad space in a website, you need to buy in CPM or CPC basis.
Suppose, if the CPM rate is $2 for the banner ad that means you will be charged $2 for every thousand times your ad was displayed to the website users.
For example, if you want to display your ad 5000 times, then your cost of advertising will be
In the above, for every $2, you will get 1000 impressions. As the name itself defines, Cost per thousand impressions.
To help you understand clearly, here is another example.
Suppose, you have a Facebook account and you wanted to buy an ad in the right hand side of your Facebook page. You want to display your ad to all the people in United States.
Let’s consider, for the US region, the CPM rate is $5. And there will be millions of people in US region generating thousands of page views (impressions) daily. If you want to spend $100 for advertising in US geo on CPM basis,
Each thousand impressions = $5
For $100, you will get $100/5 = 20 thousand impressions.
In CPM advertising, you will be charged for number of impressions. So, no matter whether you get clicks for banners or not, it doesn’t matter for the company offering CPM advertising.
Here are some of the famous CPM Advertising Networks.