What Is eCPM? 7 Proven Ways to Increase It.

If you are Captain Jack Sparrow of the publishing world, who wants to sail smoothly and discover the treasures of revenue, then the first thing you should look at is your compass – the pricing metrics. They will always guide you in the right direction, but if you trade them for something else, you know what the future holds for you. (Dead Men Tell No Tales!)

Being aware of these metrics enables publishers to make data-driven decisions, maximizing their return on investment and driving advertising success. One such crucial metric that has emerged as an indispensable tool for publishers is eCPM, or effective cost per thousand impressions. 

In this article, we’ll delve deep into the mysteries of this invaluable compass, revealing the secrets of what eCPM is, how it differs from CPM, What’s a good eCPM, and most importantly, the secrets to getting a higher eCPM. So, let’s unlock the hidden bounty of ad revenue that awaits us.

What Is eCPM?

Effective Cost Per Mille (eCPM) is an ad performance metric representing the average ad revenue a publisher generates per one thousand ad impressions, irrespective of the ad format or pricing model used. 

Unlike traditional metrics, eCPM provides publishers with a deeper insight into the performance of ad units, providing a more comprehensive and insightful analysis. eCPM is the exact cost to the advertiser for a thousand hits. High eCPM means the publisher makes more profit.

eCPM Formula

To calculate eCPM, you will need the formulae. After that, it’s all simple maths. 

How to Calculate eCPM?

To calculate eCPM, we need two things:

1. The total ad revenue generated by displaying ads on a website (or an app). These can include revenue generated from CPM, CPC, CPA, and other ad pricing models. 
2. The total number of times the ad has been displayed on the website (or app). This is called total impressions.

Once you have the number, you need to divide the ad revenue by the ad impressions and multiply it by 1000. 

So you’re a publisher who runs an online blog. You have partnered with an ad network to display ads on your website. Over a specific period, you have served 50,000 ad impressions (on a display ad unit), generating a total revenue of $200. Plugging these values into the formula, we get:

eCPM = ($200 / 50,000) x 1,000

eCPM = 0.004 x 1,000

eCPM = $4

So, in this example, your eCPM is $4

Suppose it’s a video ad unit, and you served it a similar number of times, i.e., 50,000. However, the revenue reports say that this ad unit generated $400.

eCPM = ($400 / 50,000) x 1,000

eCPM = $8

So, you guessed where I am heading?

Why Is eCPM Important?

eCPM provides a standardized way to compare the performance of different ad units, even if they have different pricing models, such as cost per click (CPC) or cost per action (CPA). By evaluating eCPM, you can compare the performance of different ad units, pricing models, and ad networks. This knowledge empowers you to optimize your strategies, leading to better results and increased revenue.

With eCPM calculated for each ad unit, you get relevant data about the effectiveness of

1. Ad placement – above the fold or below the bold, which is generating more eCPM? You can improve eCPM by improving its visibility. 
2. Ad format (banner, video, native, etc.)
3. Quality of ad
4. Ad networks – which one is getting you the highest eCPM for your ad units?
5. Targeting – are the viewers interested in the ad?

What’s the Difference Between CPM and eCPM?

Let’s understand the difference with an example:

Suppose an advertiser bids on your ad inventory with a $1 CPM per thousand impressions through a header bidding setup. If your inventory generates 4,500,000 ad impressions, the potential revenue for you as the publisher will be:

Revenue = (4,500,000 impressions / 1,000) * $1 CPM = $4,500

However, this amount will not be your exact revenue, as the header bidding provider will deduct their share for facilitating the process. Let’s assume the provider’s fee is 10% of the total revenue.

Deduction = 10% of $4,500 = $450

After accounting for the header bidding provider’s fee, your actual revenue will be:

Actual Revenue = $4,500 (Potential Revenue) – $450 (Deduction) = $4,050

Now, we can calculate the eCPM to reflect the actual earnings per thousand impressions:

eCPM = (Actual Revenue / Total Impressions) x 1,000

eCPM = ($4,050 / 4,500,000) x 1,000

eCPM = $0.90

So, while the advertiser bids at a $1 CPM rate, you receive a $0.90 eCPM after accounting for the header bidding provider’s fee. This example emphasizes the importance of understanding the difference between CPM and eCPM when evaluating the performance of your ad inventory in a header bidding setup.

The same can be counted in the case of other pricing models as well, like CPC, CPL, CPA, etc. 

Related Read: eCPM vs. CPM vs. RPM: A Comprehensive Guide for Publishers

What Is eCPM Floor?

eCPM floor is the minimum bidding price the publisher sets for the ad unit. It represents the lowest rate at which you are willing to sell your ad unit (or 1000 impressions) to the advertiser. 

As a publisher, you set the minimum bidding value called the floor price. On Google Ad Manager, this comes under setting the UPR (Unified Pricing Rule), which works on real-time data. However, certain ad monetization partners and SSPs provide you with smart floor pricing technologies that use AI and machine learning and give you the best floor price based on historical as well as real-time data while ensuring a healthy fill rate. To know more about this, please contact us. 

Now, coming to the point, the eCPM floor ensures that you are selling the ad units or the impressions at well-deserved value. It helps maintain the perceived value of your ad inventory. 

However, remember that while a higher floor can lead to higher per-impression revenue, it can also reduce the fill rate (percentage of ad inventory filled with ads). For example, if your floor price is higher than all the bids, then all the bids will get disqualified, and no ad will be served.

Finding the right balance between high eCPM and healthy fill rates is the key to success. 

What Is Good eCPM?

Any eCPM value that generates more revenue for you is a good eCPM. Isn’t it? 

Jokes apart, a good eCPM is determined by a number of factors:

1. What’s your niche: Websites belonging to finance, insurance, or health often receive good eCPM.
2. What’s your traffic: High and loyal traffic coming from special geographic locations like the U.S. or Europe will be able to get you a good eCPM. 
3. How’s your site: A fast site translates into happy users, happy advertisers, and happy eCPM.
4. What ad format are you using: A video ad format will always fetch you a good eCPM compared to the banner ads.
5. Which quarter is it: Q4 and Q2 are always considered best as compared to Q1.
6. Where have you placed your ad units: Your ad units, either banner or video, placed above the fold will always generate good eCPM compared to the one placed below the fold*.

*It’s not an honest truth. If you have optimized your ad units correctly for viewability, then they will always be auctioned off at the best of their value, with very little to no interference from the ad placement. 

Note: In general, a good eCPM is considered to be between $5 and $10.

How to Increase eCPM?

Here are some of the strategies that will help you to increase eCPM and maximize your profit as a publisher:

• Experiment with Ad Networks
• Partner with SSPs
• Attempt Different Ad Formats
• Change the Ad Placement
• Keep up with the Industry eCPM
• Search Engine Traffic
• Mobile-friendly Site

1. Experiment with Ad Networks

Each ad network has its own unique advertisers and targeting capabilities, so experimenting with various networks can lead to higher eCPM rates. Remember that it is up to you to ensure that relevant ads are being shown to your users.

How can you do that?

By partnering with the right ad networks. Yes, various types of ad networks in the market have unique capabilities and can offer you different solutions. For example, a vertical ad network can help you if you have a niche website. Whereas an inventory-specific ad network can offer unique solutions to a specific ad inventory. So, choose an ad network wisely according to your requirements.

2. Partner with Ad Mediation Agencies/SSPs

Yes, ads served via mediators’ calls for greater success and increased eCPM. Ad networks generally unite publishers and advertisers, allocating ads based on their own capabilities. However, SSPs can help you overcome the limitations of ad networks. How is it so?

A mediation company (commonly known as SSP or Seller-side Platform) connects the publisher with various Ad Networks and Ad Exchanges. As the SSPs are already working with various demand sources (Ad Exchanges, Ad Networks, DSPs, etc.), they can open up your inventories to more bidders, thus, increasing eCPM.

Besides, they can help you optimize your ad stack, improve your demands, and deliver a better user experience. This may seem obvious. It is worth mentioning that partnering with the right SSP is essential as it influences your revenue directly.

Happy to Help: At Automatad, we help publishers of all sizes to monetize their ad inventories. We connect them with the right Ad exchanges and implement suitable monetization solutions (for instance, Header Bidding) to ensure higher ad revenue, quality, and user experience. You can learn more about us by visiting our website, automatad.com.

3. Try Different Ad Formats

This part is quite tricky. Some ad formats might always work for others but not for you. So, you can’t follow a standard set of ad formats, hoping to increase your eCPM. However, the following are some of the most used formats.

Banners: Permanent rectangular and square-shaped ad formats that usually appear on the websites. How can you choose the right out of many?

Pick the one with the highest fill rate and lower chances of getting affected by fraudsters. eMarketer study shows why certain ads are prone to ad fraud, and avoiding them is always recommended (as much as you can). 

Interstitial: These have one of the greatest eCPM rates. Also identified as “full page” ads, interstitial ads occupy the full screen of the user’s device. But consider the user experience and ensure you’re following the guidelines outlined by your ad-tech partners.

Video: These ads are both “intended” (the user can skip the ad), or “compulsory” (where the interface returns after the video is finished after a period of time) and are considered one of the best formats these days.

4. Changing the Ad Placement

You should experiment with different ad placements on multiple-page sections using a mixture of ad sizes. Keep your statistical tools handy to compute CTR and the best position on the webpage. If this is professionally handled, the right placements serve huge profits.

For instance, a heat map tool like Hotjar can help you determine ideal placements with higher user engagements.

Again, many believe that adding multiple banners on a webpage can get increased clicks for improving website performance. Again, this is untrue. Adding multiple banners on a webpage can lead to “ad blindness”.

5. Keep up with the Industry eCPM

We all know how the demand for a particular format increases as the users change their behavior. In order to keep up and evolve, you need to track the industry average CPM/eCPM of different formats.

A proven example is video ads. You can see how video ad formats have experienced an increased demand just over the last few years.

6. Generate Search Engine Traffic

The more visitors your website attracts, the greater the opportunity for them to interact with ads, leading to more ad impressions, higher click-through rates (CTRs), and increased daily profits. However, not all traffic sources are equally effective in boosting your eCPM.

Search engine traffic, in particular, often yields the highest eCPM. This is because SEO drives organic traffic, resulting in users who are more likely to spend time engaging with your content and interacting with ads. Users acquired through SEO typically demonstrate higher engagement and interaction than those from other sources.

On the other hand, social media helps get the content viral quickly. This provides thousands of unique website hits in a short period that significantly increase your eCPM. Instagram, Facebook, and Twitter are there to let people share content with one another. So, if you have rich and valuable content, you can leverage these social media platforms to drive organic traffic to your website.

7. Make Your Site Mobile-friendly

With the ever-evolving Google algorithm, non-mobile-friendly websites will lose a lot of organic traffic, resulting in reduced eCPM. Many users are accessing your content through mobile devices on the go. According to Statista, around 6 billion users are using smartphones worldwide.

This means you need a mobile-friendly site with the right ad units to increase eCPM. If you provide a better user experience and higher ad engagement on mobile, buyers would love to bid more for your impressions. Here’s a guide to effectively monetize your mobile website traffic.

Moving Beyond the Basics

eCPM is a crucial metric for measuring the effectiveness of your digital advertising campaigns. And breaking it down into its component parts – CTR and conversion rate – can help you identify areas for improvement and develop new ideas to increase your revenue.

However, it’s important to recognize that achieving an ideal eCPM is not always possible with initial efforts. To maximize your revenue, you must test multiple ad networks, placements, formats, and traffic-driving strategies to determine what works best for your specific goals and audience.

The strategies we’ve discussed in this article are just the beginning. By consistently optimizing your campaigns and staying up-to-date on the latest trends and technologies in digital advertising, you can continue to grow and increase your eCPM over time. So keep experimenting, keep learning, and keep growing your business.

FAQs

1. What is a Good eCPM?

A good eCPM depends on various factors, such as the ad format, the targeting criteria, the industry, and the market demand. Generally, an eCPM higher than the average in your niche is considered good.

2. What is eCPM Formula?

The eCPM formula is calculated by dividing the total earnings generated by an ad campaign by the number of impressions, then multiplying the result by 1,000. 

3. What is the Difference Between CPM and eCPM?

CPM represents the cost an advertiser pays for every thousand impressions served, while eCPM represents the revenue a publisher earns for every thousand impressions served, irrespective of the pricing model or ad format used.