CPM in DOOH: what it means and how to compare

CPM stands for cost per mille, the cost of 1,000 impressions. It's the standard pricing unit in much of advertising, including digital out-of-home. DOOH CPM looks simple: divide the cost by the number of impressions, multiply by 1,000. The complication is the impression. What counts as one varies across DOOH networks, and two CPMs built on different definitions can't be compared directly.

A low CPM isn't necessarily a good deal. It depends on what's being counted.

How is CPM calculated?

Take the total cost, divide by total impressions, and multiply by 1,000. In a made-up example, a campaign costing $6,000 that delivers 1.5 million impressions has a CPM of $4. The cost per mille entry covers the basic formula and history.

That example is purely illustrative. Actual pricing varies by network, market and campaign, and it should be confirmed directly.

It helps to calculate CPM the same way for every proposal. If one price includes production or reporting and another doesn't, the CPMs aren't comparable even before impressions are considered.

Online, an impression is typically an ad served to a device. In DOOH, it's more complicated, because the screen is shared and doesn't know who is looking.

What counts as an impression in DOOH?

It depends on the method. Some networks count plays: each time the ad appears on a screen. Others estimate audience impressions: the number of people likely to have seen the ad, based on traffic and viewing assumptions. Some apply multipliers for how many people are near a screen during each play.

Those methods can give very different numbers for the same campaign. A network that counts plays and one that estimates viewers could report impressions that differ many times over.

Industry bodies work on standards for out-of-home audience measurement. Geopath, for example, focuses on audience measurement for out-of-home media. Asking which standards or methods a network follows is a good first question.

How do you compare CPMs across networks?

Ask for the definition. What exactly is an impression in this proposal? Plays, estimated viewers or something else? What assumptions are used?

Convert where possible. If one network reports plays and another reports estimated viewers, ask whether each can provide the other measure, or at least explain how they relate.

Ask about where the impressions fall. Are they in stores that carry your product, in markets where you have distribution? A cheaper impression outside your footprint is usually worth less than a pricier one inside it.

Compare on outcomes too. CPM measures the cost of exposure. It doesn't measure whether the exposure changed anything. A higher-CPM placement close to the purchase might produce better outcomes per dollar than a lower-CPM placement far from it. Where possible, compare cost per outcome as well as cost per impression.

Why can CPM alone mislead?

Because it ignores context. An impression on a counter screen, seen at the moment of purchase in a store that carries the product, is different from an impression on a roadside billboard seen from a moving car. Both count as one impression. Their value to a campaign may differ a great deal.

Because it ignores relevance. Impressions in stores that don't carry the product, or in markets outside the brand's distribution, have a low CPM and little value.

And because it can reward the wrong behavior. A network optimizing for low CPM might spread plays across as many screens as possible, regardless of fit. Planning for outcomes keeps the focus on what matters. For pricing and measurement questions about NRS Digital Media, contact the NRS Digital Media team, and see the NRS Digital Media site for an overview.