How CPM is calculated
Cost per mille is the price of 1,000 ad impressions. The formula is:
CPM = (ad spend / impressions) x 1,000
A worked example: a Meta campaign spends $3,000 and serves 1,200,000 impressions. CPM is 3,000 / 1,200,000 x 1,000 = $2.50. Every thousand times the ad appeared on a screen cost two and a half dollars.
CPM is the dominant buying model on social platforms such as Meta, TikTok and Snapchat, and in display and video networks. Even when you bid for installs or purchases, the auction often clears on an impression basis behind the scenes, so CPM is the first cost in the chain that ends in cost per install.
From CPM to cost per install
CPM on its own says nothing about results. It becomes useful when you chain it to the next steps of the funnel:
CPI = CPM / 1,000 / (CTR x click-to-install rate)
Take a CPM of $4, a click-through rate of 1% and a click-to-install rate of 25%. One thousand impressions cost $4 and produce 10 clicks and 2.5 installs, so CPI is $4 / 2.5 = $1.60. If a new creative lifts CTR to 1.5% at the same CPM, CPI falls to about $1.07. This is why growth teams rarely fight CPM directly: creative and store page improvements move CPI faster than any bid change.
What drives CPM up or down
- Audience competition. Narrow, high-value audiences cost more because more advertisers bid for them.
- Seasonality. CPMs rise in the fourth quarter and around shopping festivals as retail budgets enter the auction, then usually ease in January.
- Geography and platform. CPMs in the US and Western Europe are far higher than in India or Southeast Asia, and iOS inventory usually costs more than Android.
- Placement and format. Feed and in-stream video placements often cost more than audience network or banner inventory.
- Ad quality. Platforms reward ads with strong engagement with cheaper delivery, so a fatigued creative can push CPM up.
Reading CPM in your reporting
Track CPM next to the metrics that follow it: CTR, cost per install, and revenue. A rising CPM with stable CPI is usually fine; a rising CPM with falling CTR points to creative fatigue. Linkrunner syncs spend from Meta, Google and Apple Ads and ties it to attributed installs and revenue, so you can see cost per install, cost per event and ROAS by campaign, ad set and creative instead of judging campaigns on CPM alone. See ROAS measurement for how spend and revenue come together in one view.