How to Calculate True CPMs

Ad Optimization
Last updated: August 19, 2022 | by Kean Graham
How to Calculate True CPMs

This post was most recently updated on August 19th, 2022

We usually get too excited after closing a deal with a demand partner promising fruitful cooperation only to end up frustrated because we made the mistake of not calculating how much these ad networks are paying us.

Our goal here is to make sure we have fair auction within DFP and we send traffic to whoever deserves it, not to who promised what.

Main reporting tools

  • A discrepancy tracker
  • DFP report
  • Ad Network dashboard or UI report

Terminologies

Rev Discrepancy – UI revenue/DFP revenue

Imp Discrepancy – UI impressions or ad requests/ DFP impressions

Gross CPM – Gross revenue per thousand impressions (before the ad network’s cut or commission)

Net CPM – Net revenue per thousand impressions (after the ad network’s cut or commission)

Flat CPM, 100% fill

The Ad Network agreed to pay you a guaranteed amount or CPM for all (100%) the impressions you send them.

Calculation:

DFP CPM * Rev Discrepancy

Use this calculation if your line items have varied CPM rates

If DFP is set to $0.85 CPM rate (i.e. your original agreement with the rep) and discrepancy dropped to 98.91%

= 0.85*0.9891

= 0.84 (True CPM)

-OR-

(Dashboard Revenue/DFP Imps)*1000

Use this calculation if your line items have the same CPM rates across the board

If Dashboard shows $100 revenue, DFP impressions show 50,000

=($100/50,000)*1000

=$2.00 (True CPM)

Dynamic CPM, 100% fill

The Ad Network is not paying a guaranteed rate but pays for 100% of the impressions you send them. The CPM performance may fluctuate based on several factors which may include but not limited to traffic quality, site speed, user time on page, etc.

Calculation: = UI rev/(UI Imps/1000) * Imp Discrepancy %

Note: Calculation will depend on how your line items are setup (e.g. per device, geo, etc) for which you’ll need to generate the UI report.

UI report

Based on the above sample discrepancy result:

If latest impression discrepancy data shows 83.08%

= $204.74/(797,298/1000) * 0.8308

= 0.21 (True CPM)

If latest impression discrepancy data shows 89.31%

= $83.36/(449,693/1000)* 0.8931

= 0.17 (True CPM)

Dynamic CPM, non-100% fill

AdNetwork is not paying you a guaranteed CPM rate, and they passback unfilled ad impressions.

Calculation (if UI shows Gross CPM): = UI rev/(Ad req/1000) * Imp Discrepancy %

Note: Calculation will depend on how your line items are setup (e.g. per device, geo, etc) for which you’ll need to generate the UI report.

UI report

Based on the above sample discrepancy result:

If latest impression discrepancy data shows 83.77%

= $139.01/(372,829/1000) * 0.8377

= 0.31 (True CPM)

Calculation (if UI shows Net CPM) = (UI CPM* Fill Rate %) * Imp Discrepancy %

Example:

Dashboard shows Net CPM of $3, Fill rate: 85%, Imp Discrepancy of 90%

= ($3 * 0.85) * 0.90

= 2.29 (True CPM)

For help with calculating true CPM’s or any other DFP related queries contact the MonetizeMore support staff today!

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