A lot of publishers are getting confused between CPM and eCPM. Some think that they are the same but in reality, they are different. In this post, you’ll learn the difference between the two, how to calculate each and how they can be used to measure earnings.
Let’ start first with CPM. CPM stands for “Cost Per Mile” or cost per 1000 impressions. Advertisers set their desired price per 1000 ads served.
For example, the advertiser budget for a campaign is $20, and the ad receives 2000 impressions. To calculate CPM you take ($20/2000) * 1000 = $10 which means that the advertiser is willing to spend $10 for every thousand impressions.
CPM = (Cost of the campaign/ Number of total impressions) * 1000
The CPM rate helps advertisers and companies to spread their products to a larger audience for an effective advertising cost.
It is also a great metric used by advertisers to measure the cost of the campaign, how much the publisher will get paid for every 1,000 impressions, and to evaluate the effectiveness of displaying ads.
CPM is traffic driven, the higher the traffic of the site the better the CPM.
eCPM or “Effective Cost per thousand impressions” is used by publishers to determine the revenue generated from a thousand impressions of an ad campaign and to measure the performance of a publisher’s inventory being sold in various channels.
For example, if an ad campaign generated $100 revenue after receiving 10,000 impressions, the eCPM would be ($100/10,000) * 1000 = $1. This means that the publisher can earn $1 per 1000 impressions.
eCPM = (Estimated Earnings / Number of total impressions) * 1000
When is eCPM useful for publishers?
- When running a direct response campaign
- To compare site performance to averages
- A universal standard of measurement regarding revenue for the impression sold.
- Can be used as a critical indicator of the campaign’s performance.
- Allows publishers to optimize their revenue better.
- Can apply to any other buying method such as CPA, CPC, etc.
When is CPM useful for publishers?
- Visitors don’t need to click on the ads for the publisher to earn ad revenue.
- Can be placed anywhere on the site easily.
- A publisher can determine the expected revenue per impressions.
- There’s no concern regarding CTR.
- Allows publishers to generate revenue based on traffic.
- It’s served for a fixed price and can be a predictable revenue stream.
In Summary, CPM is the rate which the advertiser is willing to pay for a 1000 impressions and eCPM is the earning of the publisher per 1000 impressions.
We use CPM to increase visibility, advertise for relevant audiences, and drive high-performing campaigns. eCPM is very helpful for publishers to evaluate and optimize their monetization by monitoring ad revenue generated from campaigns.
It is important that publishers and advertisers know the difference so that they can accurately measure the revenue performance and the campaign costs for better forecasting. To find out how to maximize your ad earnings as a publisher, contact MonetizeMore for a free consultation today!