What Is eCPM?
This KPI indicates the profitability of the advertising inventory. If app publishers are showing a high eCPM, this means that the ads served on their app are performing well and converting users.
- eCPMs indicate how much advertising revenue a publisher generates per 1,000 ad impressions
- Publishers use this metric to measure and compare monetization campaigns and optimize ad placements
- This metric varies considerably from one ad format to another and depends on the GEOs you’re looking at
Why Are eCPMs Important?
Effective cost per mille is an important KPI to measure, as it shows just how lucrative an ad space actually is. App advertisers, publishers, and businesses can utilize eCPMs to optimize their monetization strategies.
The higher the eCPM, the more effectively you generate revenue from your ads. Once you know how much you are generating per impression, you can review different revenue streams and work to improve your eCPM. Use eCPMs in a particular tier as a baseline to measure performance from one tier to another.
While eCPM is a key metric for publishers to consider, they should monitor it in combination with other metrics, such as ARPDAU or ARPDEU. The other thing to note is that eCPMs are measured differently within the adtech industry, as not everyone’s definition of an ad impression is exactly the same.
How Do I Calculate eCPM?
The formula for calculating eCPM is straightforward. Simply take the ad revenue and divide it by the number of impressions. You then multiply this to determine the effect of a specific ad per 1,000 impressions.
How Do You Optimize eCPMs?
An ad could receive an impressive number of impressions, but at the end of the day, if users aren’t engaging with an ad, they will not generate the desired revenue.
In these cases, publishers must identify initiatives to increase engagement with their ad. Such actions include the following:
- ensure in-app offers are personal and relevant to users
- increase ad placement and visibility
- optimize the quality of the users acquired
eCPM vs CPM: What’s the Difference?
Another important metric in adtech, CPM simply stands for “cost per mille.” It’s the price an advertiser pays for 1,000 impressions.
To be clear, publishers use eCPM to evaluate how much ad revenue they earn for a placement. Advertisers use CPM as a cost model for how much they will pay for 1,000 impressions.
FAQs
eCPM means “effective cost per mille,” a metric used to measure and predict ad revenue. It expresses the profitability of an ad inventory. It is an estimate of the revenue you receive for every thousand ad impressions.
eCPM is calculated as (ad revenue earnings / total impressions) x 1,000.
The higher the eCPM, the more effectively publishers generate revenue from their ad. What is considered good, however, is always relative because eCPMs vary between GEOs, for example.
