Ever since advertising could be bought and sold the value of an ad was based upon an estimate of how many different people saw or heard the ad. There has been an understanding in the industry that the potential effectiveness of an advertising schedule was determined by the number of different people that viewed the ad (reach) and average frequency within an audience. The following are current accepted means of calculating CPM for different mediums:

1. For print media (when audience data is available):

CPM = Cost of 1 ad x 1000
            Number of prospects reached .

2. For broadcast media:

CPM = Cost of 1 unit of time (commercial) x 1000
              Number of prospects reached by
              a given program or time period.

With the advent of the Internet, through log file server request data it was believed that ad views could be tracked with unprecedented accuracy.  The possibilities were so exciting that “number of different viewers reached” was removed from the equation, and a new CPM  equation was created for the internet:

3. For the Internet:

CPM = Cost per ad requested x 1000

The traditional CPM model worked because the actual audience delivered was based upon what appeared on a television or radio station. The “impression” was an estimate or availability to the viewer’s eye.  The “Impression” was made on a viewer. For the Internet, the Impression measurement is not based on a viewer actually being exposed to a visible ad, but when the ad or ad beacon registers a request in a server log file.

The assumption is that a requested ad is always available when the viewer is on the requested page. This has been proven to be a false assumption.

As portals and networks grew, millions upon millions of ad requests where logged and tracked, creating a stir in the industry, but upon examining the data further it became apparent that a large number of ad requests measured for CPM pricing actually never rendered in the visible area of a viewer’s browser screen.