You may have learned about CPM, but then you got confused when you found out about eCPM. That’s the case with a lot of publishers. eCPM or Effective CPM is another key metric used to measure the ad revenue. But before getting to it, let’s recap the basics first.
CPM or Cost Per Thousand Impressions is the amount advertisers are willing to pay for every thousand impressions they receive. It’s an advertisers’ side metric that help them decide the budget of their campaigns.
CPM is calculated using this formula:
For example, if an advertiser has a budget of $100 and wants to reach 100,000 users, then his/her CPM would be $1, i.e., ($100/100,000)*1000.
How is eCPM Different?
eCPM or effective CPM is the revenue earned by a publishers for every thousand impressions. You need to pay special attention to the term ‘effective’. Here, effective CPM means the revenue earned by the publishers, effectively.
Confused? Let’s try again. eCPM is the cumulative revenue generated by publisher per thousand impressions, some of which also get clicked, then converted into leads, and become customers for the advertisers. Hence, eCPM is not just calculated using CPM campaigns but also CPC, CPL, and other such campaigns running via publisher’s inventory.
eCPM is predicted by the ad network of the publisher using this eCPM formula:
But, it sounds a lot like RPM (revenue per thousand impressions)
Google AdSense used to predict publishers’ earnings using eCPM in their previous models. However, newer AdSense versions show RPM instead of eCPM. Meaning, eCPM and RPM refer to the same thing, according to AdSense. However, if you are partnered with different ad networks, it’s better to clarify with them the metrics they use to predict your earnings.
Simply put, CPM is the money advertisers spend on a campaign. And eCPM is the amount earned by the publisher.
Why eCPM is Important
eCPM helps predict the earnings of the publishers. A target earning number can work as a motivation for publishers to work accordingly. If you are performing ad testing to find the best performing ads for your website, then eCPM achieved for different ad tests can help you choose the winner ad.
However, you should always keep in mind that eCPM is a prediction, and the actual earnings can vary. Also, don’t get confused between eCPM and RPM, both mean the same. Hence, whether you work on increasing RPM or eCPM, your ultimate goal remains the same: maximizing ad revenue.
How to Increase eCPM
eCPM can be tricky to work with, as there is no guarantee that you will earn the amount predicted by your eCPM calculation. However, as a publisher, you can certainly work on increasing the performance of your inventory. Here are factors you can start working on:
1. Increase Monthly Traffic
Your monthly traffic is directly proportional to your earnings. This is the reason monthly traffic is the first thing asked by ad networks and advertisers when they look for publishers. Similarly, in order to maximize the earnings, start with increasing your website the traffic. You can go for organic, paid or both methods of getting traffic, depending on your budget.
2. Partner with Multiple Ad Networks
Ad networks help you generate demand for your inventory. Partner with multiple ad networks for better demand and value for your inventory. Do your research to find ad networks offering better deals for different geographical locations. Adding multiple networks can get your inventory to high paying advertisers. Also, it can increase the competition on your inventory, and hence your earnings.
3. Use Different Ad Formats
When it comes to ad format, go with what your users like. For that, you need to ace your testing game. Publishers have multiple ad formats available to run tests and find the best ones. Here are some commonly-used ad formats:
- Banner ads: Simple image with text in rectangle or square shapes (like 250×250, 720×90, 300×250 and more). Because of their simplicity and effective results, banner ads are the go-to solution for many publishers and advertisers.
- Rich media ads: These are heavy, graphic and media-rich ads which are interactive and appealing for users. These creatives are generally preferred for reducing banner blindness. However, rich media ads are heavy in file size as they are in gif or video formats.
- Video ads: Video ads get the user attention in the first few seconds, and can result in better engagement compared to other formats. Hence, video ads are worth trying. Especially for video publishers, video ads are a must-try format.
- Native ads: These ads blend with the content of the webpage without disrupting user experience. Native ads look like the organic content of the page and are proven to be beneficial for publishers with engaged, content-consuming users.
It is advised to experiment with the combination of these ad formats to see better results.
4. Work on User Experience
A user who lands on your webpage but gets overwhelmed with ads is going to leave. This is a sign of bad user experience. Such practices lead to the use of ad blockers amongst users, further reducing your eCPM. In fact, most ad networks block publishers’ accounts for poor user experience. So, follow best practices while creating ad placements.
5. Get Search Engine Traffic
With good SEO practices, you get relevant users landing your website. Most of these are of high-intent users and can provide quality impressions. Quality impressions benefit advertisers with their campaign and publishers by increasing their eCPM.
6. Make Your Website Mobile-Friendly
Mobile users have surpassed the total desktop users. Hence, this is the right time to start driving traffic from mobile users as well. For that, you need to work on making your site mobile friendly; starting with AMP or PWA can be good options. Next, you can try mobile ad formats and sizes to make the most out of mobile ads.
7. Know the Value of Your Niche
The ad industry has seen that advertisers pay more for a niche audience. Some niches are more valuable than others. Check whether you fall under the category of expensive keywords. If yes, you are in luck and can make a good ad revenue out of the market.
8. Determine the Source of Your Traffic
The content and niche of your site can be exactly the same as another site. However, there can be a huge difference in the eCPM. How? Because of the source of the traffic.
The geographical location of the audience plays a huge role in your earnings. For example, the traffic from US is more valuable than Philippines. If you own a site targeting a particular geo, it is recommended that you find a good local ad network.
However, in case of a global site, try to get premium traffic to see an increase in ad revenue. For that, you can run paid campaigns to drive audience from a specific location or simply design your content in accordance with the targeted area.
We learned eCPM is the ‘effective’ revenue generated by publishers for each thousand impressions. It’s not that difficult to understand. Is it? It’s like any other factors for publishers used to increase their ad revenue, a lot like RPM. The strategies mentioned above can give you a great start.
Work on increasing the traffic, quality content and user engagement. And you will see an upward graph for your effective CPM.