CPM is an acronym for Cost per mille (cost per thousand). It’s generally used to describe a billing unit for banner advertising.
Here’s a real life example of how it’s used: A publisher or ad network contacts you and tells you that they have available banner inventory (aka impressions) and they tell you that the CPM is $12.50. This means you would pay $12.50 every time your banner is displayed 1,000 times.
So, if you do an “ad buy” of 1,000,000 impressions, your cost would be $12,500.
Here’s the formula to calculate CPM: (impressions / 1000) * CPM