What is CPM?
CPM is “cost per mille” or “cost per thousand”. CPM is the amount an advertiser pays for one thousand impressions on a web page or a video.
CPM is used in online display advertising, such as banner ads, and it’s a way for advertisers to understand the efficiency of their ad campaigns.
It allows advertisers to compare the cost of reaching their target audience across different advertising platforms or strategies.
CPM is just one of several vital metrics advertisers consider when evaluating the effectiveness of their campaigns. Other metrics, like Click-Through Rate (CTR) and Return on Investment (ROI), also play crucial roles in assessing the overall success of an advertising campaign.
What is eCPM?
The acronym eCPM means ‘effective cost per mile. Or effective cost per thousand impressions results from a calculation of the ad income generated by a banner or campaign divided by the number of ad appearances expressed in units of 1,000.
eCPM is a valuable metric for advertisers, publishers, and ad networks. It allows them to assess their campaigns’ financial performance and make informed decisions about optimizing ad placements, targeting, and pricing strategies.
eCPM helps compare the revenue efficiency of various ad campaigns and channels, enabling better allocation of resources to maximize advertising revenue.
- Seasonality:
If advertisers’ ad demand is strong, your eCPM will be higher. For example, you’re likely to see higher earnings in December (when advertisers are spending heavily on holiday campaigns) and lower incomes in January (when advertisers have less demand for ads).
- Ad type:
The eCPM in your report is typically an average across all the different ad units YouTube offers. Some advertisers may pay per thousand views, while others choose to pay only when a viewer takes a specific action on their ad (like clicking on it).
eCPM represents the estimated earnings that an advertiser or publisher would receive for every thousand impressions of their ad. It is often used to compare and assess the performance of different ad campaigns, ad networks, or ad inventory.
How to calculate eCPM?
Advertisers who want to display ads on a particular website calculate the eCPM and see if they can afford to run the ad.
eCPM, or “effective CPM,” converts non-CPM buying into a CPM calculation so you can comprehend what you’re “actually” paying in CPM.
Advertisers will compare the eCPMs of various channels and determine which converts better. The obvious choice would be going with the medium which offers the least eCPM paired with maximum conversions.
eCPM Calculation Formula
To calculate eCPM, you use the following formula:
eCPM = (Total Earnings / Total Impressions) * 1,000
- Total Earnings: This is the total revenue or earnings generated from the ad campaign.
- Total Impressions: This is the total number of ad impressions served during the campaign.
For example, if an advertiser’s campaign generated $500 in revenue from 100,000 impressions, the eCPM would be calculated as follows:
eCPM = ($500 / 100,000) * 1,000 = $5 eCPM
In this case, the effective cost per thousand impressions is $5, indicating that the advertiser earned $5 for every thousand ad impressions served.
Keep in mind that not all views are monetized—especially ideas generated on mobile devices.
If a low percentage of your views are monetized, your eCPM will seem low. If you have access to YouTube’s analytics, look at your Monetized Playbacks (rather than your Views) to get a more accurate eCPM estimate.
What is RPM?
RPM is usually the publisher’s language, and they find out how their web property performs. Pageviews keep changing, but RPM for a website in a specific industry and with one particular audience remains constant over six months to one year.
Usually, the highest paying niches such as health Insurance, Life Insurance, Automobile insurance, Online education, Marketing, and telecom will have the highest RPM.
Other side entertainment niches have a relatively low RPM.
How to Calculate RPM?
Page RPM is a formula used to calculate the revenue generated by a web page. Page RPM is calculated by dividing ad revenue by the total number of page views and multiplying the result by 1000:
Note that, A publisher is not always charged for every thousand impressions. Sometimes, publishers may charge it based on the number of clicks. However, they can still be measured through the ad campaign on RPM.
RPM = (Total Revenue) / (Total Impressions) x 1000
Example:
Suppose advertiser A pays $1 per click. On running the ad, and generates 100 clicks on 10,000 page views.
It means that for 10,000 page views, the publisher earned $100
(100 clicks x $1 per click). The RPM would be:
- ($100/10,000) x 1000 = $10
Suppose Advertiser B pays $2 per click. On running the ad,
and generates 100 clicks on 10,000 page views. Total earnings now would be $30.
(100 clicks x $2 per click). The RPM would be:
- ($200/10,000) x 1000 = $20
In both the above examples, we can easily make out that Advertiser B performs better because the RPM is higher!
