What Is eCPM?
This KPI indicates the profitability of the advertising inventory. If app developers 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
- This metric indicates the profitability of the advertising inventory
- Publishers use eCPMs to optimize ad placements, monitor monetization campaigns, and measure overall ad performance
Why Is eCPM Important?
Effective cost per mille is a significant key metric to measure, as it shows just how lucrative a portion of ad space actually is. App advertisers, publishers, and businesses can utilize eCPMs to optimize their strategies for clicks and monetization.
The higher the eCPM, the more money you generate from ads. Once you know how much you are generating per click, you can review different revenue streams and work to improve your eCPM.
How Do I Calculate eCPM?
The formula for calculating eCPM is straightforward. Simply take the revenue generated from an advertisement campaign and divide it by the number of impressions.
You then multiply this by 1,000 to determine both the effect of a specific ad or a whole inventory per 1,000. Most publishing platforms provide this information to their users, but it’s still good practice to understand how the figure is calculated.
This is how to calculate eCPM.
eCPM = (ad revenue earnings ÷ total impressions) × 1,000
CPM vs eCPM: What’s the Difference?
Another important metric in adtech, CPM simply stands for “cost per mille.” It’s a breakdown of how much 1,000 impressions cost and is simply a payment model.
CPM and eCPM are not interchangeable. They are completely different metrics for measuring the cost of a campaign versus its effectiveness. CPM rate is the rate an advertiser is willing to pay for 1,000 impressions, where eCPM calculates the actual earnings of the publisher for 1,000 of these impressions. Both are useful in entirely different ways.
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.
Simply put, the higher the eCPM, the higher the revenue a publisher generates from ads. What is considered good, however, is always relative niche and general audiences differ.
eCPMs vary widely and depend on a variety of factors, such as the location of the ad, the geography of the traffic, seasonality, site speed, and more. In general, eCPMs average between $4 and $10.