Software and internet platforms
CPM (cost per thousand impressions)
The price an advertiser pays for 1,000 views of an ad.
Facts checked against sources onWhat does CPM (cost per thousand impressions) mean?
CPM means cost per mille, from the Latin word for thousand. It is the price of showing an ad 1,000 times (1,000 impressions). Ad revenue = impressions / 1,000 x CPM. Example: a streaming service shows 50 million ad impressions a month at a CPM of 20, so it earns 50,000 x 20 = 1 million. CPMs are higher for audiences that advertisers value more, such as high-income viewers or people close to buying, and for scarce, premium placements such as live sport.
Where does it come up in case interview prep?
- How media, streaming, and gaming make moneyLesson in Media, streaming, gaming, and advertising
- Subscriber and content economicsLesson in Media, streaming, gaming, and advertising
- Media players, trends, and how to crack the casesLesson in Media, streaming, gaming, and advertising
- How internet platforms, marketplaces, and digital ads workLesson in Internet platforms, marketplaces, and digital advertising
- Platform unit economics: contribution per order and ad revenueLesson in Internet platforms, marketplaces, and digital advertising
- Internet platforms: players, super-apps, trends, regulation, and how to crack the casesLesson in Internet platforms, marketplaces, and digital advertising
Related terms
- CPC (cost per click)The price an advertiser pays each time someone clicks an ad.
- ROAS (return on ad spend)Revenue earned for each unit spent on advertising.
- Fill rate (advertising)The share of available ad slots that are actually sold and shown.
- SVOD and AVODStreaming paid for by subscription (SVOD) versus paid for by advertising (AVOD).
- Annual recurring revenue (ARR)The yearly value of all active subscription contracts at a point in time.
- Net revenue retention (NRR)How much recurring revenue a group of existing customers brings in a year later.
- CAC payback periodHow many months of gross profit it takes to earn back the cost of winning a customer.
- Rule of 40A software company's growth rate plus its profit margin should add up to at least 40 percent.
Learn it in context
See CPM (cost per thousand impressions) at work in a lesson from Media, streaming, gaming, and advertising, with checks as you go.
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