How to Set the CPM

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CPM, when used in reference to online advertising, refers to Cost Per Mille or Cost Per Thousand. This is the cost charged to an advertiser for every thousand views of an ad. If you are running a website and want to add advertising to it, CPM is one method of costing to determine the advertising rate. Several factors go into calculating the CPM rate, such as overall traffic, the size of the ad and its actual placement on the page.

  • Look up your current website traffic numbers. You will need to be realistic here if you want to keep your advertisers. If you do not have more than 10,000 unique visitors (as opposed to page views), you cannot charge a premium rate for your CPM. A site with less than 10,000 visitors a month can typically charge around $10 or less per CPM. If you have a very high rate of traffic -- such as more than 100,000 unique visitors per month, you can charge as much as $50 a CPM or even higher, depending on the buying habits of your website visitors.

  • Consider the placement of the ad. An ad placed at the top of a page or above the "fold" will cost more than an ad placed at the bottom of a page. The "fold" refers to the amount of website seen on a monitor without scrolling down. Set a sliding scale that reduces the price per CPM for ads that appear lower on the page.

  • Measure the size of the ad. A very large ad that is highly visible on a page will cost more per CPM than a very small ad that is tucked away. If your advertiser wants to have a large ad, you can charge more because it is taking up more space on your site.

  • Check your competitors' pricing. Find similar sites with similar amounts of traffic by referring to Alexa rankings. See what they charge per CPM and figure this amount into what you will be charging your advertisers. Stay competitive with your pricing.

  • Weigh the buying habits of your visitors. Consider whether you have site visitors that are engaged and leave comments regularly or simply read one page then leave. More engaged visitors are more apt to check out what an advertiser has to offer; and as such, this type of audience is worth more to an advertiser than one that simply looks then clicks off.

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