CPM stands for “cost per thousand” and is a way to measure the cost effectiveness of an advertising campaign. It is typically used in television advertising to measure the cost of reaching 1,000 viewers or households with an advertisement.

To calculate CPM, the total cost of the advertising campaign is divided by the number of viewers or households reached, and then multiplied by 1,000. For example, if a television station charges $1,000 for a commercial that will be aired during a program with an estimated audience of 100,000 viewers, the CPM would be $10 ($1,000 / 100,000 x 1,000).

CPM is often used as a benchmark for comparing the cost of different advertising options and to determine the most cost-effective way to reach a target audience. For example, if a television station offers different ad spots on different programs and the CPM for a prime-time show is higher than another, it could be considered as more expensive to reach the same number of viewers.

CPM is also used to negotiate rates with advertisers, as it provides a common denominator that allows advertisers to compare the cost of different advertising options across different media. It also helps advertisers to understand how much they would need to pay to reach a specific number of people with their ad.

In summary, CPM is a metric used in television advertising to measure the cost of reaching a specific number of viewers or households with an advertisement, and it is often used to compare the cost of different advertising options and to negotiate rates with advertisers.