What is eCPM?

The eCPM abbreviation stands for effective cost per thousand impressions (Mille) and is calculated using the following formula:

ecpm calculation
RPM or eCPM?? In fact, both terms mean the same thing but from two different points of view. For the the publisher it is RPM – revenue per Mille and for the advertiser that would be eCPM.
The eCPM term is more commonly used because sales people tend to talk the same language as their customers, so publishers just talk about eCPM when they arrange ad placements with their advertisers.

Why use the eCPM metric?

CPM is the amount an advertiser pays to have its ads served 1,000 times but not all campaigns are charged using the per impression model. The pool of ads placed on a property (website or app) besides CPM can have different pricing models like cost per click (CPC), cost per lead or cost per action (CPA), fixed-price sponsorship and other. But you would always want to compare the efficiency and thus profitability of different ads and placements, that is where the eCPM metric comes in handy.

So how do you calculate eCPM for different campaign types?

eCPM for a CPC campaign

To calculate your eCPM rate for a cost per click campaign over a chosen period of time you will need to know:

  • the number of ad impressions
  • number of clicks on these ads
  • CPC rate for the campaign

eCPM for a CPA campaign

For campaigns with a cost per action rate (CPA, it can be any type of conversion like a sale or a signup), you need to check up:

  • the number of ad impressions
  • amount of conversions\actions taken
  • the CPA rate for the campaign

And the calculations are very similar:

As a publisher, you should always try to increase your eCPM or RPM. This makes your web site or app more profitable. We will soon publish a follow up with some ideas on how to do that.

Stay tuned!