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However, publishers frequently mix up CPM and eCPM. Both metrics are quite useful if you understand their differences and each one’s use in the world of programmatic advertising, but many tend to ignore them since they don’t comprehend the distinctions between them.

With this blog post, let’s clarify the distinction between eCPM and CPM and clarify any misunderstandings.

eCPM vs CPM

Before digging into eCPM vs CPM, you first need to understand them individually, what they are, and how it functions in advertisement strategies.

eCPM: What Is It?

Effective “Cost per Mille,” often known as eCPM, is the cost per thousand impressions. The eCPM and CPM indicate the publisher’s advertising revenue from 1000 ad impressions.

The primary distinction is that eCPM is the average of multiple CPMs. Because numerous advertisers compete with one another using various CPMs for each ad impression the cost isn’t fixed. The average of all advertiser bids for your ad impressions is what eCPM provides you with.

Even using various bidding mechanisms, such as CPC, you can acquire some of your advertising inventory. Since all bidding models have different earning potentials, eCPM is useful in determining this. The overall amount of ad income received by the publisher increases with increasing eCPM.

CPM: What Is It?

CPM, generally known as “Cost per Mille,” stands for cost per thousand impressions. Advertisers bid or pay a set amount for every 1000 ad impressions. CPM is the publisher’s measure of the income from these 1000 ad impressions.

If a website has significant traffic, the CPM price will often be high since advertisers will be prepared to pay more for your ad impressions.

The Primary Differences Between eCPM Vs CPM

Parameters	CPM	eCPM
Definition	CPM is referred to as the amount an advertiser pays a publisher for every 1000 ad impressions.	The effective cost per thousand impressions, or eCPM, is the amount of money made from the campaign.
Calculation Formula	CPM = (Advertisement Cost/ No. of Impressions) X1000	eCPM = (Total revenue generated/Total Ad impressions)X1000
Purpose	CPM is a purchasing model. It is the fee that the publisher must be paid for each 1000 ad impressions that are published.	The metric used to determine the campaign’s efficacy is eCPM.
Dependency	CPM is entirely dependent on publishing expenses.	The revenue earned affects eCPM.
Hierarchy	In a marketing effort, CPM comes before everything else.	eCPM succeeds CPM and is routinely calculated after the campaign.

 

How Do You Calculate CPM and eCPM?

Now that you know the formula of both through the above-stated eCPM vs CPM table, let’s understand how you can calculate them,

Consider owning a business that sells Bananas (ad inventory). These bananas stand for advertising impressions. Bananas tend to spoil, so you want to sell them as quickly and for the most money as you can. Assume you have 10 bananas in your inventory, each of which is equivalent to 1 million ad impressions. This provides you with 10M ad impressions overall.

You sold the first 5 bananas (5M ad impressions) practically instantly for the CPM rate of 1$ because your bananas are the best in your community. This resulted in a 5000$ profit from ads

(5000000 /1 000 x 1$ = 5000$)

You then sold 4 additional bananas (4M ad impressions) for the CPM of 0.20$, generating 800$ in advertising revenue (4000 000/1 000 x $0.20 = $800).

Unfortunately, the final banana batch was terrible, and you couldn’t sell it. In total, after selling 9 fresh bananas, you made $5800 (5000$ + 800$).

In this instance, your eCPM would be calculated by dividing your total ad income ($5800) by the total number of ad impressions you sold (9M), which would result in an eCPM of $0.64.

($5800 / 9M x 1000 = $0.64)

Consider the fact that eCPM only accounts for the 9M sales, not the 10M total ad impressions you originally had. This means that for every 1000 ad impressions you sold, you made an average profit of $0.64.

What Is a Good eCPM?

A decent eCPM will always rely on a variety of variables. Without context, a metric is simply a number; to compare and assess a metric’s effectiveness, you need that context. Among those elements are:

·         Ad Placement

Above-the-fold ad units will bring in more money but also receive more impressions.

·         Location

Publishers who operate in premier markets, such as the US, the UK, and others, frequently experience higher eCPM rates.

·         Seasonality

The number of impressions purchased by advertisers can change in response to particular circumstances. While some marketers’ efforts may be reduced throughout the summer, occasions like Black Friday, Christmas, Valentine’s Day, and other commercially focused occasions unquestionably boost the rivalry for available space on most publishers’ websites.

·         Site Speed

The site performance affects how much a user interacts with the content and how quickly the adverts are served, just like other user experience elements.

·         User Interaction

A website with engaged, devoted users who frequent the site will be able to charge greater costs, which will translate to higher rates.

·         Advertisement Format

Due to the greater cost of video ads compared to standard display ads, overall revenue will increase.

·         Advertising Platform

The revenue rates from native advertisements or sponsorships may be higher than those from display ads.

·         Audience Sizing

Sites that cater to a more specific audience can charge greater charges than publishers with a broader audience.

Should eCPM be high or low?

The statistic you see in your eCPM indicates how much revenue your website made per 1,000 impressions. As a result, if the eCPM is high, your website’s advertisements are doing well. That, of course, brings you more income.

Which country has the highest eCPM?

According to our research, the United States will continue to lead the list of countries with the highest eCPM for rewarded advertisements in 2023 ($12.91 on Android and $13.18 on iOS), as it did at the same point in time last year (H2 2020 – H1 2021).

It’s interesting to note that Android and iOS have the same country rankings for rewarded video ads. However, iOS had significantly better eCPM for rewarded ads than Android.

How to Increase eCPM

·         Join Up Several Ad Networks

One strategy to create demand and raise the value of your ad inventory is to make it available across several ad networks. Increasing competition for your ad units is one way to boost your eCPM and income. Look for the ad networks that provide the finest discounts for your area when you join one.

·         Activate a Supply-Side Platform

You may quickly integrate many ad networks and incorporate other revenue-optimization features like header bidding with a supply-side platform. Doing so can raise your eCPM rates while also increasing your fill rate and overall revenue.

·         Try Out Different Ad Sizes and Formats

Publishers now have a wide range of choices for making money from their work. Publishers can use rich media advertisements, video ads, native ads, and more in addition to display ads, which come in several sizes and styles. Some of these formats can boost the efficacy of your ad units or draw in more quality advertisers. You may maximize your eCPM by finding the ideal mix of ad formats and sizes.

·        Optimize the User Experience

Respecting user privacy and adhering to best practices for usability and user experience will turn over your audience’s trust in your website. Your bounce rate will increase if your website is overrun with adverts. Long-term, it’s a losing strategy because your organic traffic will decline, and ad networks might stop serving ads to your website.

·         Make Your Website SEO-Friendly

Users that find your website through organic search are of high quality since they did a search engine query to find the content they were looking for. Publishers can raise their eCPM with high-quality traffic.

eCPM Formula

To calculate eCPM, divide total advertising income by total advertising impressions, then multiply the result by 1000.

eCPM = (Total Ad Revenue/Total Ad Impressions) * 1000

eCPM Example

Let’s say you made $2000 in one day as a publisher and provided 400,000 impressions on your website.

In that case, your eCPM should be equal to ($2000/400,000)*1000 = $4.

Accordingly, this site makes $4.0 for every 1,000 impressions.

Conclusion

Now that you know the distinctions between eCPM vs CPM, publishers need to comprehend eCPM and CPM as important ad tech industry indicators.

On the one hand, CPM aids in your comprehension of the advertiser’s perspective on ads and ad inventory. Whereas comparing performance based on your website, ad networks, ad formats, etc., is made easier by eCPM.