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What is eCPM?

What is eCPM?

Let’s decode the answer to the question, what is eCPM? eCPM is a strategic ad performance metric used by publishers to scrutinize and monitor the revenue generated from the ads on their site. eCPM frequently gets tangled with the CPM metric by publishers. It’s easy to get jumbled with these two terms at first, but that won’t happen again once you finish reading this article. Today we’ll see the significant difference between CPM vs eCPM and how you can calculate eCPM.

What is eCPM? eCPM is an abbreviation that denotes effective cost per mille – ‘Mille’ is a Latin word for thousand. eCPM metric is splitting the ad revenue per campaign or banner by the number of thousand ad impressions. eCPM is also a way to gauge the performance of an ad based on the revenue constructed for every thousand impressions.

You also need to pay specific attention to the word ‘effective.’ Here, effective CPM means the revenue earned by the publishers, efficiently and effectively. eCPM is cumulative revenue initiated by publishers per thousand impressions. Therefore, eCPM is calculated using CPM campaigns and CPC, CPL, and other such campaigns running via the publisher’s inventory.

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How to calculate eCPM?

How to caclculate eCPM

Advantages of eCPM:

  • eCPM is a tactical metric as it assists publishers in evaluating their future revenue. Using the average eCPM from past campaigns, publishers can create targets and use them as benchmarks for testing the best-performing ads on the site

  • eCPM supports publishers in evaluating their monetization efforts’ performance regardless of channel, ad type, and pricing model. With eCPM, publishers can create a comparison in between the adequate revenue from various ad units even if their pricing model differs

  • eCPM offers predictions related to the remunerations and earnings of the publishers. A target earning number can work as a noteworthy motivational factor for publishers to function appropriately. If an individual is performing ad testing to find the best performing ads for a website, then eCPM achieved for multiple ad tests can help them pick the front-runner

What is the crucial difference between CPM and eCPM?

The abbreviations CPM and eCPM cannot be interchanged. eCPM is the cost for thousand ad impressions irrespective of the buying method. For example, eCPM can be computed for campaigns that are bought on a cost-per-click (CPC) or cost per acquisition (CPA) basis. This makes eCPM a suitable metric for comparing costs across numerous types of campaigns, whether they are bought on a CPM (Cost per mille) basis or not.

Beyond CPM, there are two most common campaign models available.

Cost Per Click (CPC): This is where the publisher earns money each time a user clicks on the advertisement. CPC can be defined as the Cost to Advertiser divided by Total Clicks

Cost Per Action (or Acquisition) is where the publisher is remunerated when a user completes an action, like filling a form or making a purchase. CPA can be defined as the Cost to Advertiser divided by Total Acquisitions (or Actions).

So, Cost per mille (CPM) CPM is a metric to gauge the cost of a specific ad campaign and is calculated per thousand impressions, whereas eCPM stands for effective cost per mille. That means how much ad revenue a publisher earns per thousand impressions served and is a vital KPI in digital advertising because it shows the profitability of ad inventory.

How to increase eCPM?

You can improve and increase your eCPM by optimizing your monetization strategy or by following below mentioned tips:

  1. Apply more innovative software: For example, an in-app monetization solution that helps increase competition for your inventory

  2. Test multiple types of ads: Have you tried your hand at video ads, banner ads, rewarded video ads, or in-stream ads?

  3. Increase fill rates by setting up multiple ad networks: It will help in generating more demand and creating more competition for your inventory

  4. Explore and observe: Which ad format are users most engaging with so that you can optimize future placements to accommodate these formats

  5. Pay attention and improve your viewability score: It is proven that advertisers can target ads and sites with high visibility and willing to pay more to win these impressions

  6. Get involved with the right monetization partner: One of the most vital steps in increasing and improving your eCPM is to work with the right monetization partner. Preferably, the partner should offer the following to you:

    • Incremental Revenue – Utilize unused ad positions
    • Excellent User Experience – Non-intrusive ad formats
    • Easy Implementation with One Tag – No need for site redesign
    • Power of Prebid Demand- Maximize yield with bids from multiple SSPs
    • Standard Formats – High fills because of multiple format support
    • Experienced account managers who can assist you in maximizing eCPMs

Remember, the right monetization partner, merged with an optimized monetization strategy, can help you raise your eCPMs drastically. Even an incremental surge makes a massive impact on revenues.

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