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 beholds 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.
So, me hearties, hoist the Jolly Roger and prepare to embark on a swashbuckling adventure. In this article, we’ll delve deep into the mysteries of this invaluable compass, revealing the secrets that’ll help us navigate our way to success. Together, we shall brave the storm, outwit our foes, and ultimately, unlock the hidden bounty of ad revenue that awaits us. Savvy?
Table of Contents
What Is eCPM?
Effective Cost Per Mille (eCPM) is a performance metric representing the average revenue a publisher generates per one thousand ad impressions, irrespective of the ad format or pricing model used.
Unlike traditional metrics, eCPM delves deeper into the performance of ad campaigns, providing a more comprehensive and insightful analysis. By focusing on eCPM, publishers can better understand their ad revenue and optimize their strategies to generate higher earnings and enhance user engagement. eCPM is the exact cost to the advertiser for a thousand hits. High eCPM means the publisher makes more profit.
To calculate eCPM, you will need the formulae. After that, it’s all simple maths.
eCPM is calculated by dividing the total revenue generated by an ad campaign by the number of impressions the campaign received. Let’s understand this with an example:
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, 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
eCPM provides a standardized way to compare the performance of different ad campaigns, 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 campaigns, pricing models, and ad networks. This knowledge empowers you to optimize your strategies, leading to better results and increased revenue. Savvy?
What’s the Difference Between CPM and eCPM?
|It is a pricing model that represents potential earnings per 1,000 ad impressions.||It is a performance metric that reflects the actual earnings per 1,000 ad impressions.|
|It helps publishers estimate how much they can earn from displaying ads.||eCPM provides insights to make an educated decision* on the type of ad units to create/run in the future.|
|High CPM rates indicate that the ad inventory is valuable and in demand, which can lead to increased earnings for the publisher.||*Suppose an SSP/Ad Exchange paid you $5 for 500 impressions, for a 300 x 250 ad unit, and $3 for 800 impressions, for a 250 x 250 ad unit. By calculating the eCPM for both, you will know that the former earned you $10 while the latter earned you an eCPM of $3.75. You can plan and create ad units accordingly.|
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.
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). Besides, we have studied the best ad sizes for websites. Begin with a few and wait for the results.
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.
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.