martinibuster - 7:55 am on Mar 18, 2010 (gmt 0)
CPM ads pay a fraction of a cent, whereas CPC ads pay 10 to 100 times as much.
The system makes advertisers bid an amount that would best what would otherwise be made via a click as measured by the average impressions between clicks and the cost per click. It's not difficult to calculate. The calculation is in your control panel. That number you see in your control panel is what CPM ad buyers are bidding against.
If one thinks about it, the idea that Google would give away your inventory to make less money doesn't make sense at all.