Glossary of Terms|
CPM is an abbreviation that has long been used in the traditional ad world. It stands for "Cost Per Mille"; where mille is Latin for thousand.
In practice, then, CPM is a figure used to price ad banners according to how many 1000 ads are delivered. Thus, if an ad network claims to pay its publishers $1.50CPM, then they will receive $1.50 for every thousand ad impressions that they deliver.
Variations upon this term that you may see thrown about within this site and elsewhere are "Net CPM" and "Effective CPM". Net CPM, obviously, suggests the amount of money that a publisher will actually receive for each 1000 impressions. This takes into account agency commissions and default impressions. So while a network may sell ads across your site at an average rate of $5CPM, if they keep a 50% commission, and only sell 40% of your ad space (with the rest going to unpaid default impressions), your Net CPM will be 0.4(50% x $5) = $1CPM.
Effective CPM relates to the approximate CPM value that you could receive when running ads that are performance-based. For example, if a banner pays on a per-click or per-lead basis, your effective CPM is a measure of how much you make on average for every 1000 impressions delivered. It is not a guarantee of future performance, and does not represent a fixed rate, but can be used to weigh your options. If, for example, you serve 30,000 impressions to a CPA or CPC network, and earn $45 for doing so, your effective CPM is $1.50.