If there’s one thing you can count on in ad tech, it’s that there’s an acronym for everything: CPM, eCPM, RPM. Wading through an alphabet soup of terms and metrics can be challenging for publishers that are trying to figure out how to measure the success of their monetization efforts.
We’re going to make it easy for you, and break down the need-to-know metrics for publishers.
CPM stands for cost per mille, or cost per thousand impressions. CPM is regularly used by publishers to measure the performance of partners, but it’s not the most effective way to measure revenue or compare partner performance.
CPM is really an advertiser metric. CPM is the amount that an advertiser pays to show their ad 1,000 times. For publishers, CPM is the revenue earned from these 1,000 impressions.
CPM is calculated as follows:
Revenue / Impressions x 1,000
For example, if an advertiser paid $7,000 for 1,250,000 impressions, the CPM for that campaign is $5.60:
$7,000 revenue / 1,250,000 impressions = 0.0056 x 1,000 = $5.60
Theoretically, that means that a publisher will earn $5.60 for every 1,000 impressions on that ad unit sold to that advertiser.
CPM is useful for publishers because it helps them estimate revenue on a single ad unit and understand the value of their audiences (a higher CPM indicates higher traffic value), but it doesn’t directly translate to money in a publisher’s pocket, as it doesn’t take into account other factors that affect revenue, such as traffic quality, seasonality, and fill rate.
eCPM is similar to CPM but allows publishers to measure the average revenue generated by 1,000 impressions. CPM calculations assume a single advertiser paying a fixed CPM; eCPM takes into account the fact that multiple advertisers are bidding on impressions, at a wide range of CPMs.
Consider the example above, whether the publisher was earning a $5.60 CPM with a single advertiser. Let’s imagine a more realistic scenario where there are multiple advertisers bidding on impressions, so the total revenue was $15,000.00 for 3,500,000 impressions.
eCPM would be calculated as follows:
$15,0000 revenue / 3,500,000 impressions = 0.004285 x 1,000 = $4.29 eCPM
eCPM is also an effective way for publishers to normalize data across a variety of campaign types. Not all advertiser campaigns have CPM goals; advertisers also run cost-per-click (CPC) or cost-per-action (CPA) campaigns. eCPM allows publishers to compare apples-to-apples across advertisers and ad partners and measure performance accurately.
RPM stands for revenue per mille, or revenue per thousand impressions. RPM represents the earnings for every 1,000 impressions.
RPM is calculated as follows:
Revenue / Impressions x 1,000
RPM is similar to CPM but measure’s the publishers revenue from the ads, rather than the advertiser’s cost to display them.
RPM is a more accurate way for publishers to understand performance, as the data points can all be pulled from the publisher side, and takes into account factors that affect revenue, such as fill rate and viewability.
RPM can be calculated at the ad, page, or session level. Measuring RPM at different levels will yield different insights (that we’ll dig into in another post), but the end result is the same: publishers can understand how much they’re actually earning, instead of how much they could earn, which is what CPM provides.
CPM, eCPM and RPM are similar metrics, but measuring and comparing RPM is where publishers should focus to understand how to optimize their inventory and monetization strategies. pubGENIUS’s team of experts can help publishers collect and analyze these metrics, and offer actionable recommendations to improve revenue. Get in touch with our team today for your complimentary assessment.