The abbreviation eCPM stands for “Effective cost per mille”. It is a significant digital advertising metric for each publisher.
In this article, we will discuss in detail why webmasters need to know their eCPM, how to calculate it, why it is vital not to confuse eCPM and CPM, and whether there is an ideal eCPM indicator.
Before we start, let us note that eCPM is not the only indicator that is important for the publisher’s work with advertising. In some cases, this metric may not be used or may have a different name.
Meaning of eCPM
As it was already mentioned, eCPM refers to “Effective cost per mille”. Or simply put “Effective Cost per thousand impressions”. It allows the webmaster to track how much profit is brought by every 1000 impressions of an advertising unit that is posted on his/her website.
It is important to understand that eCPM is the average, cumulative, or just simply effective profit of a webmaster from advertising units. How exactly does this work?
The publisher usually sells traffic to an advertising network, which, in turn, will sell this traffic through different formats and platforms. As a result, the actual profit for every 1000 advertising impressions will be different.
Thus, eCPM is the average profit of a webmaster for 1000 impressions of its advertising on all existing ad units. Accordingly, the higher this number is, the greater the total revenue of the webmaster.
How to calculate eCPM?
Based on the explanation above, we get the following formula for calculating eCPM as the average value of the publisher’s profit per 1000 impressions:
eCPM = (Total Ad Revenues / Total Ad Impressions)*1000
However, it is also worth noting that advertising networks often calculate approximate eCPM values for a publisher even before launching advertising campaigns on his website. In this case, the formula will be as follows:
eCPM = (Estimated earnings / Total Ad impressions)*1000
Difference between eCPM and CPM
CPM and eCPM are obviously easy to confuse. In fact, the difference between them is very simple.
CPM is an indicator for advertisers. It shows how much the advertiser is willing to pay (or will eventually pay) for 1000 impressions of his ad placed on a web resource. Therefore, it is his bid. This is only relevant for the CPM pricing model.
eCPM is an indicator for webmasters. It demonstrates how much the expected (or already final) average profit of the webmaster will be for every 1000 impressions that were received with the help of his traffic for all active advertising campaigns on his website. All pricing models are taken into account here, not just CPM.
Why do you need eCPM?
eCPM is definitely one of the most important metrics for any webmaster. These numbers make it clear what your real profit is at the moment, regardless of the sales channels, advertising format or pricing model.
In addition, knowing the eCPM of previous advertising campaigns, you can predict how much profit you can expect in the future. If you are not satisfied with the current cumulative eCPM, you can always turn to advertising networks like Galaksion. professional managers will compare the results from campaigns with different parameters in order to optimize the settings next time or reject inefficient offers.
What is an optimal eCPM?
The main thing to understand here is the fact that there is no universal standard for good eCPM. Generally speaking, the average eCPM usually starts from several cents.
Always keep in mind that the real number is individual for each publisher and depends on many factors, such as:
- where the traffic comes from (geography)
- where exactly the ad is placed on the website
- users’ engagement
- content niche
- target audience
- advertising format and many more.
To control the above parameters, webmasters turn to advertising networks. This article was written in partnership with the Galaksion advertising network.