If you would like to calculate your revenue to find which advertiser gives you the best results, there’s also one term you’ll have to be familiar with which is RPM.
In this article, you are going to learn what is CPM, eCPM and the difference between them. I’ll also tell you RPM is and how to calculate both of them easily.
Let’s start right away.
Also known as cost per mille, CPM is the abbreviation used to refer to cost per thousand impressions.
Cost per mille is termed when the advertising cost is calculated per thousand views. And the cost per impressions is used to calculate the online advertising cost per view.
No matter if an Ad is clicked or not, an advertiser has to pay for every Ad shown known as the impression was made. No one might click but that doesn’t show the success of your campaign.
If you run an Ad campaign and the price you pay for every 1000th Ad impression is the CPM of your campaign.
The reason advertisers use CPM is brand awareness. It exposes the brand ads to thousands of highly-targeted people all over the targeted region.
If you are a publisher, CPM data does not show what you’ll earn. You have to check the Revenue per thousand impressions [RPM]. If you display ads on your website and want to calculate how much you would earn using CPM data check out the RPM section.
Google Ads does a great job at targeting and retargeting Ad campaigns.
eCPM stands for effective cost per thousand impressions. Also known as effective cost per thousand mille.
If you are running ads, eCPM is the cost for every 1,000th Ad impression when any buying method is used such as CPC, CPM, CPO or CPA.
You can calculate eCPM by dividing total revenue by the total number of impressions in thousands. eCPM is still a better way to track the success rate of your Ad campaign.
You should always calculate the eCPM before launching your Ad campaign to check it is within your budget and if you can afford to run it.
eCPM can be calculated using the formula:
Total earnings/impressions x 1000.
The Difference Between eCPM and CPM
The main difference between CPM and eCPM is from what you buy ads from and what data you use to calculate it. If you but ads based on CPM the eCPM and CPM would be the same.
However, when you buy ads using methods like PPC, eCPM and CPM would differ.
Ad Campaign A – the fixed CPM is $100
If you generate 1000 impressions then you’ll have to pay $100
Ad Campaign B (Using CPC) – On an average, the CPC is $1 and you generate 1000 impressions and 50 clicks
You’ll have to pay 50*1 = $50
So, you’ll have to pay $50 for 1000 impressions of your Ad campaign. When you calculate it in CPM, it is $50 which is called eCPM.
Apart from advertisers, publishers too have specific metrics to track how their websites are performing in terms of generating revenue fro them which is RPM.
CPM is what advertiser has to pay and RPM is what publishers earn through running advertisements on their web pages or apps.
RPM stands for revenue per thousand impressions.
With RPM you can estimate revenue you’ll generate by displaying ads on your website. If you’ve generated $50 after 10000 times an Ad was displayed on your website, your RPM would be
50/10000*100 = $5.
This means you are making $5 for every thousand Ad impressions.
For calculating the estimated earnings as a publisher, you can use the RPM formula which is:
Total revenue/total impressions*1000.
When RPM Is Important For You
RPM is genuinely important for publishers (who run ads on their websites) especially when your primary money making source is displaying advertisements.
Your efforts should be to constantly improve your RPM. Doing so will help you increase your monthly income over time. I’ve seen tools like ezoic to be very effective in improving RPM when you are using AdSense on your website.
When you’ll give advertisers better CPM and yourself a better RPM you can get direct advertisements and better money making opportunities. Over the time you’ll start getting better offers from advertisers.
CPM is an important term you need to understand because you’ll see this very often.
If you plan to start an Ad campaign for promoting something, you should calculate CPM beforehand. You should also connect with different brands and study what eCPM are they generating.
As a publisher, make use of RPM data to constantly grow your revenue.
Now you know what eCPM and RPM mean. What will you do next?