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Is CPM and RPM the same thing?

By February 20, 2008

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Many veteran online business owners use the two terms interchangeably, but they mean completely different things.

CPM is an acronym for Cost Per Mille. It is the price advertisers pay to have their ad shown 1,000 times. (Mille means "thousand" in Latin.) It is the common unit for discussing the cost of advertising campaigns.

Its counterpart is the RPM, or Revenue Per Mille, of a webpage. The RPM is calculated by adding up the price charged to advertisers (CPM) for each ad block on the webpage, then subtracting the cost of delivering that advertising like sales commissions and Web hosting fees.

If you are a business owner looking to buy advertising, you care about the CPM. That is your unit cost to run a campaign.

If you are a website publisher that earns money by displaying advertising, you care about the RPM. That is your revenue from displaying advertising after all the fees and commissions are paid.

For other essential online business terms, check out the hot of the presses Online Biz Glossary.

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