What is eCPM? The Ultimate Guide to Effective Cost Per Mille

AdTech Industry Definitions
August 22, 2023 | by Aleesha Jacob
what-is-ecpm-how-to-calculate

eCPM or Effective Cost Per Mille is one of the most important revenue metrics publishers need to track. In this post, we’ll help you avoid any confusion by taking a closer look at its meaning, how to calculate it, how to optimize it, and answer other questions you may have.

eCPM meaning

eCPM, an abbreviation for Effective Cost Per Mille, represents the estimated earnings of an ad per 1,000 impressions. Essentially, it serves as a bridge between CPM (Cost Per Mille) and CPC (Cost Per Click) advertising, offering a comprehensive measure that aids publishers in evaluating the performance of their ads. It is used on many platforms that monetize through display ads which can include desktop, mobile, in-app, and video.

The higher the eCPM, the more money publishers are earning from their ad units. So what is eCPM and how do you calculate it?

eCPM Formula = Total Ad Earnings / Impressions x 1000

For instance, if an ad generates $100 from 50,000 impressions, the eCPM would be:

eCPM = 100/50,000 * 1,000 = $2

Why eCPM Matters?

The metric encapsulates:

  1. Revenue Measurement: It provides a clear picture of potential revenues for every 1,000 ad impressions, granting publishers insight into their monetization strategies.
  2. Performance Benchmark: With eCPM, publishers can gauge the performance of different ads and campaigns, enabling them to make informed decisions on content placement and targeting.

How does eCPM result in income?

This question gets typically asked by people who don’t understand what eCPM is in the first place. The previous sections should have cleared up some confusion. Here is a simple explanation to further demonstrate its use.

Let’s say you’re a publisher and your site is generating 100,000 impressions per day. You’re testing different revenue models and want to focus on monetizing via display ads.

You set up Google Ad Manager and place the ad units on your website. After a week’s time in your revenue dashboard, you calculate an eCPM of $4.

This means that you used the formula:

eCPM = Total Ad Earnings / Impressions x 1000

Then plug in your Total Ad Earnings ($400) and Impressions (100,000)

=($400 / 100,000) x 1000

eCPM = $4

So for the 100,000 impressions you generate per day advertisers are paying out $400 to you. So for every 1,000 impressions you generate, you earn $4. If your website traffic stays constant for the next 30 days at 100,000 impressions per day, you’ll make $12,000 in ad revenues at a $4 ad eCPM.

Here’s that broken down at a monthly basis for you:

eCPM = Total Ad Earnings / Impressions x 1000

Then plug in your Total Ad Earnings ($12,000) and Impressions (3,000,000)

= ($12,000 / 3,000,000) x 1000

eCPM = $4

How to increase eCPM?

What is eCPM? The Ultimate Guide to Effective Cost Per Mille MonitizeMore

Since eCPM can be used on so many platforms, each with a different set of users, rules, ad networks, and ad servers, there is no one size fits all solution.

To improve your eCPM means that you will need to optimize your ad monetization strategy, whether it’s for display advertising via desktop or through your mobile app.

Some options you can try include:

  • Joining ad networks that serve your specific geographical traffic region
  • Setting up multiple ad networks and increasing your fill rate
  • Setting up header bidding
  • Testing out different ad units
  • Optimizing ad layouts
  • The list is almost endless

Be sure to take a closer look at our blog post on ad optimization advice for new publishers.

However, implementing different methods and testing out new techniques takes a lot of know-how and time. The best solution would be to consult an ad optimization expert who can either assist you with your ad optimization tasks or point you in the right direction.

Be sure to contact MonetizeMore for a free consultation to find out how we can assist in maximizing your ad revenues.

Why is my eCPM so low?

Here our answer will be very similar to the section on increasing your ad revenues above. There can be many reasons for low eCPMs or poor ad earnings. This can include displaying ads from an ad network that does not correctly support your traffic geography or utilizing a poor ad network.

Or, not having enough advertiser competition for your traffic. Also, you might have a slow website, a bad ad layout or you’re not utilizing the correct ad units. It could even mean having some pages banned from your ad network and not displaying ads correctly.

What is a good eCPM on a publisher website?

eCPMs differ a lot depending on where the ad is placed (above the fold or below the fold), your traffic geography (tier one such US, UK tend to be higher), seasonality, site speed, user engagement, and even your niche.

In general for a publisher monetizing with display ads, one can expect an eCPM range of $4 – $10.

Strategies to Optimize eCPM

Enhancing eCPM is pivotal for publishers looking to maximize their ad revenue. Here are some salient strategies:

1. Quality Content Creation

Content is king. High-quality, engaging content attracts more visitors and keeps them on the page longer, boosting ad impressions and eCPM.

2. Effective Ad Placement

Ads positioned strategically, especially near engaging content, have higher chances of being viewed and clicked, positively impacting eCPM.

3. Responsive Ad Units

With the myriad of devices available today, it’s imperative to use responsive ad units to ensure ads display correctly across different screens, leading to better engagement and higher eCPM.

4. Leverage Rich Media Ads

Rich media ads, like video or interactive banners, typically have higher engagement rates than standard display ads, potentially driving up eCPM.

5. Data-Driven Decision Making

Regularly analyzing performance metrics can reveal patterns. By capitalizing on these insights, publishers can refine their strategies, optimizing content and ad placements for better eCPM.

Overcoming Common eCPM Challenges

In the quest for higher eCPM, publishers often encounter certain challenges:

1. Volatile eCPM Values

eCPM can fluctuate based on several factors like ad demand, user location, or time of year. It’s essential to constantly monitor and adjust strategies to maintain consistent growth.

2. Ad Blockers

With users increasingly employing ad blockers, it’s crucial to diversify ad formats, focusing on non-intrusive ads and encouraging users to whitelist your site.

3. Competition

The digital ad space is competitive. Continuously innovating and adapting to industry trends is the key to staying ahead and maintaining a high eCPM.

How to set an eCPM floor?

Be sure to read our blog post on how to set up price floors through Google Ad Exchange (now known as Google Ad Manager) here.

Conclusion

eCPM will always be the OG metric publishers need to keep tracking. By understanding its significance, knowing how to calculate it, and implementing robust strategies to optimize it, you’ll pave the way for sustainable growth in your upcoming ad revenue paycheck.

Want to find out how we can help maximize your ad earnings? Sign up for a Starter account at MonetizeMore today!


Additional FAQ

What does eCPM stand for?

eCPM stands for effective cost per thousand impressions or effective cost per mille.

How do you calculate eCPM?

To calculate eCPM, all you have to do is divide the Total Ad Earnings by Impressions and multiply it by 1000.

What is the average eCPM?

eCPMs differ a lot depending on a variety of factors such as the ad location, traffic geography, seasonality, site speed, and more. Generally, eCMPs average between $4 - $10.

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