Calculate CPM – formula & information about the contact price per thousand

CPM – (per-thousand-contact price, or thousand-contact price) – is a key figure that you use to calculate the advertising costs/advertising costs for your business. The key figure is primarily used in the areas of media planning and advertising.

You can use the CPM to determine how much it will cost you if you reach 1,000 visitors/people in your target group with an advertising medium or advertising campaign. A frequently used synonym for the per-thousand contact price (CPM) is Cost-Per-Mille (CPM). This key figure is mainly used in English-speaking countries. But TAI (Thousand Ad Impressions) is also known.

Depending on the type of advertising, the name for displaying advertisements may differ. “Visual contact” is referred to in print advertising, on TV and in online marketing. On the radio, however, we speak of “listening contact”.

Would you like to calculate your CPM? There is a simple formula for this. You'll find out how to use them in the next paragraph!

All you need to calculate CPM are a few simple key figures. These include:

• Costs for an advertising campaign
• Number of contacts/reach achieved (including impressions)

The following formula is required to calculate the CPM:

CPM (cost per thousand contacts) = (cost of the advertising campaign / number of contacts reached) x 1,000

Here is an example of the CPM calculation:

(15,000 euros / 250,000 impressions) x 1,000 = 60 euros

In the CPM calculation example above, the costs for an advertising campaign are 15,000 euros. We also reached 250,000 contacts and achieved 250,000 impressions with the campaign. If we use both key figures in the formula, this results in costs of 60 euros per 1,000 contacts achieved.

By the way: If you want to calculate the CPM, you don't even have to use the calculator yourself. You can find lots of CPM calculators on the Internet that you can use to calculate and determine your own CPM with just a few clicks. Here you even get helpful additional functions, for example to compare the costs of two campaigns.

Not only can you calculate the CPM, but you can also use the per-contact price to determine the cost of an advertising campaign. To do this you simply have to change the formula:

Cost of an advertising campaign = (50 euros x 200,000 impressions) / 1,000 = 10,000 euros

In the example above, we multiply the CPM cost of an advertising campaign by the number of impressions. We then divide the interim result by 1,000 and get the final result of 10,000 euros in total costs.

In the last paragraph we learned how to calculate the CPM. But what advantages and disadvantages does TKP marketing actually have?

Advantages of the TKP

• Comparison of advertising media: You can calculate the CPM for every advertising medium (e.g. online, radio, print) and every area. Accordingly, it is possible to compare the channels and determine the most cost-effective media.
• Planning the budget: Do you have a specific advertising budget available and would you like to estimate how high the costs will be for a target group? The TKP supports you in planning.
• Easy measurement: The CPM is easy to measure - so you can easily track performance and success and see whether an advertising campaign is worthwhile - even in the long term.
• Controlling costs: Always keep an eye on your advertising campaigns and check costs at regular intervals. This means you can control them and intervene in a timely manner.
• Focus on target groups: Do you have several target groups in your sights? You can calculate the CPM for each individual target group. This means you know how well advertising is received by the respective target group and what is most worth focusing on in the future.
  

Disadvantages of the TKP

• Low significance for niches: If you are active in a specific niche and are targeting a specific target group, calculating the CPM does not always provide meaningful results.
• Not helpful for all campaigns: There are campaigns for which it is difficult to determine metrics such as impressions. Accordingly, it is difficult for you to calculate the CPM.
• Quality < Quantity: Calculating CPM is primarily about quantity, not quality. In some cases it is difficult to find out how effective a particular advertisement really is.
• Missing conversions: How many advertising viewers actually converted as a result of an advertising campaign (e.g. ordering in the shop)? Especially with advertising media in the offline area (e.g. in magazines), it is not possible to determine conversions for a campaign.

Especially with the last point we see that it is not always or only very difficult to say how effective and successful certain advertising campaigns actually are. This particularly applies to advertising media such as radio, TV and print.

Things look different in the online area. Here you can calculate the CPM and include other important metrics such as conversions. For example, you are able to calculate TikTok's CPM and see how many users have subscribed to your newsletter. If you do the same with an advertising campaign on Instagram and compare the two, you will find out which campaign is ultimately more efficient.

When calculating and determining the CPM, a distinction must also be made between net and gross range. The two terms primarily refer to the coverage of a target group.

Net range

• The net reach of the thousand-contact price only includes unique/unique contacts who perceive an advertisement. Double perceptions – when a person sees or hears an advertisement several times – are not taken into account.
• The net reach is particularly meaningful and provides information about how many people have actually seen or heard of an advertising campaign.

Gross range

• The gross reach, on the other hand, refers to the total number of all people who perceive an advertisement - including double perceptions. This creates double perceptions when a contact sees or hears an advertisement more than once. They are included in the CPM calculation.
• This includes all people who perceive advertising – including, for example, those who read or hear an advertisement several times.

You can also calculate the CPM in online marketing (e.g. as Influencer) - precise, targeted and fully automatic! Here it is possible to include any criteria and points that are helpful and meaningful when determining the price per thousand contacts.

We have deepened the topic specifically for creator collaborations: In the CPM in Influencer Marketing guide, we show benchmarks per platform and how you can use them to negotiate prices. And you can read about which overall budgets are realistic in the overview of Influencer Marketing Costs.

This includes, for example, demographic characteristics, regions and keywords. We at Ad Specialist can also calculate your CPM and use data analyzes to determine exactly what works and where you can improve.

Our goal is for your brand to continually grow and be taken to the next level. Together we will scale your marketing and make you successful! Do you have any questions about it? Talk to us!

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