What does "Cost Per Thousand" Mean?

Cost per thousand is a common term in advertising that references the cost of showing an advertisement to one thousand people. Cost per thousand is also sometimes called “cost per mille,” or abbreviated as either CPM or CPT. The CPM abbreviation may be confusing to some beginners, but experts point out that in this case, CPM uses a Roman numeral “M” referring not to a million, but to a thousand.

Different companies offering various forms of advertising have classically used cost per thousand as a way to calculate the “return on investment” for a client. The CPM or CPT number helps a business to understand how it uses and pays for advertising services. Generally, the advertisers can provide a concrete estimate on how advertisements in a certain venue, for example on a given television show, magazine page, or other placement, can result in some specific amount of views by “end users” or consumers.

As traditional advertising moved from print media and television toward the Internet, a different kind of system emerged for calculating the cost of advertising. In addition to cost per thousand and similar terms, online advertisers now often use a cost per click (CPC) method. CPC measures how much the advertising costs the client “per click” or, per single page view initiated by someone surfing the Web.

In addition to changing the methods for advertising cost calculation, cost per click generated another similar term: pay per click (PPC). The pay per click system is where advertising clients only pay when someone does initiate a page view. Although PPC payments can be difficult to handle because of the tiny monetary amounts associated with a single, or even 1,000 page views, in some ways, PPC can be a more efficient and effective way of paying for advertising. PPC and similar methods conform to the idea of paying only for what you use, which is almost always attractive to either business or consumer clients.

Advertising professionals will be familiar with terminology like cost per thousand, especially when they are involved in bidding projects to clients or arranging for the delivery of advertising services. Just as in any industry, advertising needs a way to measure results, and to price services; cost per thousand is an effective way to create these concrete agreements between buyers and sellers. Businesses can use CPM or CPT data to make decisions on cost effective marketing and choose between all of their available options, whether it’s between two or more ad service companies, or between differently priced ad venues.