I have been made an offer to advertise my site on a related site with CPM - something I have never dabbled with.

Cost is $50 or $100 per 50,000 impressions, depending on banner size/placement.

The site tells me they have 16k registered members and 300k hits a month.

Does this sound like a good deal? How would I go about figuring out whether it's worth it, or is this kind of advertising just a case of suck it and see?

What's the best way to check up their traffic - alexa?

Any tips gratefully received!

What's the best way to check up their traffic - alexa

absolutely not! Unless your target demographic happens to be Asian visitors, with a focus on Internet work.

I have been made an offer to advertise my site on a related site with CPM

Usually means - "I have this email from" or "I have had a phone call from"
If that's the case, save your money.

300k hits or 300k pageviews? the difference is important. Hits as a stats metric is completely useless. Every item on a page that is requested is a hit, so one page view could register as 20 or 30 hits.

Banners are pretty ineffectual in getting qualified traffic. So unless the site(s) showing the banners are very close to yours in target visitors, you are not going to see much from them.

I approached them first - they have a forum used by people who might be interested in my site, and have a link on their page to contact them about advertising. Their exact wording is If you want to reach out to music lovers! Advertise on SOFT!
We have more than 16k registered members. More than 300k people check out SOFT each month.

Actually the site is in Singapore (they do a lot of music theory exams there, believe it not!), so perhaps Alexa wouldn't be so bad if you say it's the Asian market? What would you suggest instead?

How does cpm like this usually work? I mean, would I pay a fee up front and then the ads will stop when the limit is reached, or would I just keep on paying until the ad is cancelled? Or perhaps there are no norms and every campaign is different? I just want to arm myself with knowledge before making a decision on this!

could be worth testing it at least for the ROI.

How does cpm like this usually work? I mean, would I pay a fee up front and then the ads will stop when the limit is reached, or would I just keep on paying until the ad is cancelled?

No idea which charge model they are using, but with some systems you would pre-load your account with a budget and when it's gone it's gone. Some you set a monthly budget and it charges your credit card each time you need to "top-up". Some will just charge you without having a budget limit.
With a managed system you should be able to set impression ratios, maximum budget etc etc.

You need to do some maths though and ask some questions, a busy site could do 1000 impressions in a few days and not show the ad to a real person once.
eg:
do bots count as impressions? and what is the impression ratio for your advert.

You also need to work out what the approximate cost is going to be.
assuming a 1% imp rate for your ad on 300k PVs is $150/$300 per month, now that is a fair bit of money to spend showing bots your advert.

Yeah you're right. Having slept on it, I think I would be wasting my money. I don't make enough money off my site to justify paying out that kind of money. Thanks for the advice though Chris BTW if Alexa is crap, where do you go to find out traffic on other websites?

BTW if Alexa is crap, where do you go to find out traffic on other websites

Unless the site makes their logs public, you can't.

Alexa is just a guesstimated extrapolation based on the minute (relatively speaking) number of alexa toolbar users. Which are mainly newbie webmasters and "internet marketers".