Cost per impression (CPI), or "Cost per thousand impressions" (CPM), is a term used in traditional advertising media selection, as well as online advertising and marketing related to web traffic. It refers to the cost of traditional advertising or internet marketing or email advertising campaigns, where advertisers pay each time an ad is displayed. CPI is the cost or expense incurred for each potential customer who views the advertisement(s), while CPM refers to the cost or expense incurred for every thousand potential customers who view the advertisement(s). The abbreviation CPM refers to Cost Per Thousand, using the Roman numeral "M" to represent the word "Thousand".
Purpose of Cost per impression
Cost per impression, along with cost per click and cost per order, is used to assess the cost effectiveness and profitability of online advertising. CPI is the closest online advertising strategy to those offered in other media such as television, radio or print, which sell advertising based on estimated viewership, listenership or readership. CPI provides a comparable measure to contrast internet advertising with other media.
Impression versus Pageview
An impression is the display of an ad to a user while viewing a web page. A single web page may contain multiple ads. In such cases, a single pageview would result in one impression for each ad displayed. In order to count the impressions served as accurately as possible and prevent fraud, an ad server may exclude certain non-qualifying activities such as page-refreshes or other user actions from counting as impressions. When advertising rates are described as CPM or CPI, this is the amount paid for every thousand qualifying impressions served at cost.
Construction of Cost per impression
Cost per impression is derived from advertising cost and the number of impressions.
Cost per impression ($) = Advertising cost ($) / Number of Impressions (#)
Cost per impression is often expressed as Cost per Thousand Impressions (CPM) to make the numbers easier to manage.