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This CPM calculator is designed to help advertisers develop their budget. Cost per Mille (thousand views) is a popular method of pricing display advertising. CPM divides the cost of the advertising by the number of views (impressions), divided by a 1000. This is commonly used to quote pricing for banner ads.
It's important to understand the key differences between CPM (cost per thousand views) and CPC (Cost per Click), the other method of pricing banner advertising. From a pure pricing perspective, don't get caught up about which is "better" - savvy buyers have piles of data and can easily compare advertising costs between the two different pricing systems. The TERMS under which you are operating for a CPM vs. CPC program are (or should be) significantly different and will have a major impact on how you structure your programs.
Let's start by discussing CPC advertising. This is a relatively simple way of managing display advertising across a large network of publishers that you don't know very well. Especially if you are highly confident in your ability to turn clicks into sales (eg. you know that 100 clicks turn into $50 in sales). Simply set a price you are willing to pay per click and allow anyone to show the ad. The advertising network tries to find the ads with the best mix of CTR and CPC for a given web page. As long as you avoid click fraud (and they are good at spotting it), this method works very well from an advertiser perspective.
Now - as a publisher, I've got some serious frustrations with CPC advertising. First, there are certain types of advertisers where they get the great value from the banner ad without a click. For example, political advertising - the bulk of the value is from showing someone's name and face vs. getting a real click to their website. Or local grocery stores, Wal-Mart, Target, and most major restaurants - if they show a picture of the deal, the viewer doesn't have to click. Good for them but...bad for me. Option A: ban them from my site. Option B: find a better deal, where I'm paid for showing the ad. This is called CPM advertising - where I'm paid a fixed rate for the space.
However, with great power comes great responsibility. Since I'm being paid on a cost-per-impression basis, there are a lot more ways for me to make mischief. For example, having a bot inflate my ad impression (don't do it). So a CPM deal requires a higher level of trust in the web publisher. On a related note, advertising placement becomes increasingly important - the banner must be visible to the viewer and placed next to appropriate content. I've found ad visibility to be a key factor in getting good CPM bids as a publisher, to the point where I slice up my ad inventory by visibility. Highly visible slots above the fold (visible on page load) should run display advertising; use less visible space below the fold for CPC, affiliate offers, and native ad units. If you have two highly visible ad slots and one low visibility slot, consider dropping the third ad or using another ad network (CPC or performance based).
For the sake of completeness, the calculator also allows you to enter the number of clicks generated and the advertising / sales revenue generated by the promotion. This allows you to calculate your cost per click and advertising ROI, along with several other common marketing metrics. For a deeper look at marketing return on investment, take a look at our detailed marketing ROI calculator.
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