From Wikipedia:

Cost per impression, often abbreviated to CPI or CPM for Cost per thousand impressions, is a phrase often used in online advertising and marketing related to web traffic. It is used for measuring the worth and cost of a specific e-marketing campaign. This technique is applied with web banners, text links, email, and opt-in e-mail advertising. Although opt-in e-mail advertising is more commonly charged on a cost per action (CPA) basis, sometimes CPM is used.

An online advertisement impression is a single appearance of an advertisement on a web page. Each time an advertisement loads onto a user’s screen, the ad server may count that loading as one impression. However, the ad server may be programmed to exclude from the count certain nonqualifying activity such as a reload, internal user actions, and other events that the advertiser and ad serving company agreed to not count. For online advertising, the numbers of views can be a lot more precise. When a user requests a web page, the originating server creates a log entry. Also, a third party tracker can be placed in the web page to verify how many accesses that page had. There are other advertising pricing structures, which are generally referred to as Cost Per Action (CPA) :

  • CPC – Cost per click Through
  • CPL – Cost per lead (lead usually meaning a free registration)
  • CPS – Cost per sale
  • dCPM – Dynamic CPM
  • CTR – Clickthrough rate (the number of clicks on an ad divided by the number of impressions)

CPI and/or Flat rate advertising deals are sometimes preferred by the publisher/webmaster because they will receive a more consistent fee proportional to the amount of traffic.

Today, it is very common for large publishers to charge for most of their advertising inventory on a CPM or CPT basis. A related term, effective cost per mille (eCPM), is used to measure the effectiveness of advertising inventory sold (by the publisher) via a CPC, CPA, or CPT basis.

This type of advertising arrangement closely resembles television and print advertising methods for speculating the cost of an advertisement. Often, industry agreed approximates are used. With television, the Nielsen ratings are used; print is based on the circulation a publication has.