What is eCPM And Why is it Important For Publishers?

As a publisher, you might have come across the advertising terms eCPM and CPM and assumed they mean the same thing. It's a common mix-up, but there’s important differences between the two. In this post, we'll dive into what eCPM is, how it differs from CPM, and why understanding this distinction is crucial for your ad monetization strategy. We’ll also help you calculate eCPM accurately and share effective tips to help you increase it.

What is eCPM?

eCPM, also called effective CPM, stands for effective cost per thousand impressions, with "mille" meaning "thousand" in Latin. It’s a metric you can use to estimate the revenue you earn from every thousand ad impressions. The "effective cost" part is key because eCPM represents the actual revenue publishers like you receive from an ad network.

eCPM should not be confused with RPM, or revenue per mille. While both advertising metrics relate to revenue, RPM specifically measures the earnings generated per one thousand page views. For related terms, check out our Ad Tech glossary.

Why is eCPM Important For Publishers?

eCPM is important for publishers because it provides a clear picture of how well your advertising inventory is performing. It also highlights areas where you can optimize your monetization strategy.

5 Reasons Why eCPM Is Important For Publishers

1. Accurate Revenue Estimates: Unlike CPM, which only measures the cost for every 1,000 impressions from a particular campaign, eCPM includes the earnings from all types of campaigns (CPM, CPC, CPL, etc.) running on a publisher’s site. eCPM lets publishers compare the performance of different types of advertising in a much more simple way.
2. Optimization Opportunities: By tracking eCPM, you can spot which ad placements, formats, or campaigns are most effective. This helps you fine-tune your ad strategy and focus on what works best to increase your overall earnings.
3. Ad Inventory Value: eCPM helps you understand the value of your ad inventory. Knowing this is useful if you're making direct deals with brands and agencies.
4. Tracking Performance: eCPM is a useful way to measure the success of different monetization strategies over time. You can monitor changes in eCPM to see how adjustments in ad placements, formats, or even partnerships are affecting your ad performance and revenue.
5. Maximizing Ad Revenue: By focusing on eCPM, you can make sure you’re getting the most out of your ad inventory. Keep reading for strategies for how to increase eCPM.

You can read more about why eCPM is such a valuable metric for publishers here.

eCPM vs CPM

In our blog eCPM vs CPM, we offer a detailed breakdown of the difference between the two, but we’ll do a quick recap.

CPM stands for cost per mille, or cost per thousand impressions. Advertisers use this metric to set their ad budgets for their ad campaigns by showing the amount they’re willing to pay for every 1,000 times their ad is seen on a publisher's site. The formula for calculating CPM is (Total campaign budget / Total ad impressions)*1000.

Key Differences Between CPM and eCPM

• Purpose: CPM is used by advertisers to set ad budgets, while eCPM is used by publishers to measure revenue performance.
• Calculation: CPM calculates the cost per thousand impressions, while eCPM calculates the revenue earned per thousand impressions.
• Scope: CPM specifically calculates the cost per thousand impressions in a CPM ad buying model, while eCPM is a revenue metric that can be used with any pricing method, including CPC and CPL.

How To Calculate eCPM

Use this simple formula to calculate eCPM:

Example Of How To Calculate eCPM

Imagine you earned $1500 in a day and your website generated 300,000 ad impressions that day.

To calculate your eCPM, you’d use the formula (1500/300,000) * 1000, which equals $5.

If your earnings and impressions stay the same over the next few days, you can expect to sell each 1,000 ad impressions for around $5 on average.

Pretty straightforward, right?

What Is A Good eCPM?

Short answer–it depends. eCPM rates can fluctuate significantly based on factors such as:

• Ad Format and Placement: Not all ad formats have the same eCPM rate. For example, video ads usually have higher eCPMs than display ads. The positioning of ads on your site can also heavily influence your eCPM rate. Ad units placed above the fold perform better because they receive more ad impressions.
• Type of Content: Content that’s high quality, niche, or specialized can attract better eCPM rates. Advertisers are willing to pay more to place their ads next to content that’s relevant to their brand and targets their ideal audience.
• Geo Location: eCPMs are higher in regions with higher purchasing power, such as North America. Currently, the country with the highest eCPM rates is the United States. Regions with emerging or developing markets are more likely to see lower eCPM rates.
• Industry: Industries like finance, technology, and healthcare usually have higher eCPM rates because they target valuable audiences and are competitive. Advertisers in these industries pay more because a single sale can be worth thousands.

You can figure out what a good eCPM is by comparing the eCPM rates on your site across different factors like placement or format. You can also review your eCPM trends over time to help you make an accurate estimate.

What is an eCPM floor?

In programmatic advertising, an eCPM floor is the minimum price a publisher will accept for their ad inventory. Essentially, it’s the minimum CPM bid an advertiser has to make to serve an ad on a publisher’s site. It’s a useful strategy that helps publishers ensure they get a minimum amount of revenue for displaying ads on their site.

An eCPM floor is influenced by factors such as types of ad units, advertisers, geo locations, and device types. Just keep in mind that price floors should be monitored and adjusted regularly so that your revenue stays on track.

How To Increase eCPM

As we mentioned earlier, if you want to increase your overall ad revenue, you have to increase your eCPM.

Here are some steps you can take to increase your eCPM:

1. Increase your monthly traffic: The logic behind this is simple. More site traffic, more ad impressions. You can increase your site traffic by creating high-quality, relevant content and optimizing it for search engines (SEO). You can also use social media and email marketing to promote your site.
2. Join multiple ad networks:  Your site is valuable, so ad networks should be eager to compete for your ad inventory! Partnering with several ad networks helps create competition, which is a great way to increase your eCPM. Do your research to see which ad networks are right for you.
3. Improve your ad viewability: You can’t increase your ad impressions if your ads aren’t visible. The Interactive Advertising Bureau (IAB) has different standards for ad viewability depending on the type of ad. Check out this helpful guide on ad viewability and how you can improve your ad viewability rate.
4. Test different ad formats: Experimenting with various ad formats can help to drive a significantly higher eCPM. Try incorporating video ads, native ads, and interactive ads, as these often perform better than standard display ads. Look out for Click-Through-Rate (CTR), conversion rates, and total impressions to see which ones resonate most with your audience.
5. Improve your site’s user experience: A positive user experience keeps visitors on your site longer and encourages them to spend more time on your time. Make sure your site loads quickly and is easy to navigate. A better user experience can lead to more page views and higher ad interaction, which in turn increases eCPM.
6. Optimize your site for SEO: SEO is key to attracting organic traffic, which can boost your eCPM since search visitors often have specific intentions. Focus on finding the right keywords, optimizing your pages, and building strong backlinks to improve your search rankings.
7. Make your site mobile friendly: Statista found that mobile web traffic accounts for about 60% of total web traffic. As mobile browsing becomes popular, it’s crucial that you optimize your site for mobile users, so make sure you use ad formats that are adapted for smartphone screens.

Managing all these variables can be overwhelming, especially when you just want to focus on creating quality content. Your best option is to partner with an ad management company that can handle all the monetization and optimization work for you.

At Snigel we offer personalized support and advanced optimization strategies to boost your ad revenue. We connect you to the top ad networks and ad exchanges, increasing competition for your inventory and your eCPM rate. Your dedicated ad operations expert will continuously monitor and optimize your site to make sure you get the most out of every impression. Get in touch with us to find out how we can help you make the most of your ad setup.