eCPM is a metric both publishers and advertisers use to evaluate the effectiveness of their advertising goals. But what exactly is the eCPM and how does it help publishers? In this blog, we will delve into the nitty-gritty details of it.
There’s no denying both publishers and advertisers strive for optimal results for all their ad campaigns. Nonetheless, for advertisers to maximize their ROI and publishers to maximize their revenue, there’s one metric they should keep a watchful eye on – and that’s eCPM.
eCPM refers to the effective cost per thousand impressions. As the name suggests itself, the metric is used to calculate the revenue publishers earn per thousand impressions.
Tracking eCPM is a vital practice to follow as it identifies whether or not the adverts being shown on a website are effective.
According to the recently released yearly mobile eCPM report, seasonality is the main tactic to grow your revenue. By analyzing the seasonality trends of eCPM, publishers can get enough flexibility to target different markets and quickly bring the best value to their eCPM rates throughout the year.
Key Findings of the Report:
- One notable trend that remains to be constant in Japan all year long is higher eCPMs for the IOS devices, making it $0.26 in March.
- Emerging countries such as South Korea and the Philippines have experienced exponential growth in their revenue metrics, specifically for rewarded and interstitial ads. (Source: BusinessofApps)
- During economic conjuncture, eCPM in specific Easter-European countries have been less affected compared to their western counterparts.
If you’re one of the players in the ad tech industry or a keen observer of it, you must have heard about eCPM. Let’s have a complete rundown of eCPM.
Also Read – What is CPM? A Definitive Guide for Publishers in 2023
What is a Good eCPM?
What is considered good eCPM for one publisher may not be good for another. It varies depending on several factors, such as the type of content and audience of the website.
A good eCPM varies on certain factors:
- Industry’s Benchmark
- Ad formats
- Audience demographics
For example, industries like technology and finance may have higher eCPMs than news or entertainment.
- Specific ad formats, let’s say video ads and native advertising, may receive a higher eCPM rate compared to banner ads.
- In fact, it was discovered that rewarded video ads had the highest eCPM across all app categories, followed by interstitial ads and banner ads.
In a general sense, a good eCPM is one that helps publishers maximize their ad revenue and, at the same time, balances the ad relevance and user experience.
How to Calculate eCPM?
eCPM is calculated by dividing total earnings by the number of impressions and multiplying the result by 1,000. Here’s how it works:
eCPM = (Total earnings/number of impressions) * 1000
For example, if a publisher earned $100 from 10,000 impressions, the eCPM would be:
eCPM = ($100 / 10,000) * 1000 = $10
So here, the publisher earned $10 for every thousand impressions.
What is Effective Average eCPM Rate?
As mentioned earlier, the eCPM of any publisher varies. Plenty of factors are taken into account to calculate it, such as traffic geography, website speed, seasonality, and the list. However, the average eCPM rates fall between $4 to $10.
Publishers can use average eCPM to find out how well their campaigns have performed in the past and set for themselves specific benchmarks to achieve. In addition, the CPM also contributes to the lowest overall revenue share.
Let’s now jump into the difference eCPM shares with CPM.
What is the Difference Between CPM and eCPM?
The main difference between CPM and eCPM is what they measure. Advertisers generally use CPM to determine how much money they need for ad impressions.
On the other hand, eCPM is used by the publishers to determine the amount of revenue they will earn for their ad inventory.
|CPM (Cost per mille)||The cost that an advertiser pays for every 1,000 ad impressions||Total cost of the ad campaign / Total number of ad impressions x 1,000|
|eCPM (Effective cost per mille)||The estimated revenue earned by a publisher for every 1,000 ad impressions||Total earnings / Total number of ad impressions x 1,000|
It is also noteworthy that CPM is fixed, while eCPM fluctuates since it depends on the effectiveness of ads.
To further illustrate the concept, let’s look at some examples of both eCPM and CPM.
Also Read – Understanding CPC vs CPM for Ad Publishers
Examples of eCPM and CPM
Suppose you have a website through which you showcase banner ads, and each banner ad represents 1000m impressions. This leads to 1 million impressions every month.
Keeping this in mind, if an advertisers spend $100 for your banner ad that is generating 10,000 impressions, CPM would be calculated as:
CPM = (total cost / total impressions) x 1,000
CPM = ($100 / 10,000) x 1,000
CPM = $10
Thus, the CPM for this ad campaign will be $10.
Similarly, you will be able to calculate the eCPM. Here you need to know the total revenue generated from the ad campaign.
Let’s say the total revenue the campaign generated is $150. Here is how it goes:
eCPM = (total revenue / total impressions) x 1,000
eCPM = ($150 / 10,000) x 1,000
eCPM = $15
So this is how you can calculate both CPM and eCPM.
Now that we’ve covered the factors that can impact eCPM rates, let’s take a closer look at the concept of an eCPM floor and what it means for publishers and advertisers.
What is an eCPM Floor?
An eCPM floor in ad tech refers to the minimum price a publisher sets in the auction for the advertisers to sell their ad inventory. In the auction, the bidder who wins the auction pays $0.01 more than the second-highest bidder. This means the publisher is bound to make a certain amount of money for each ad they display on their website.
To put it in another way, all bidders must meet the eCPM floor price set forth by publishers; otherwise, no ads will be served on the publisher’s website. A publisher decides on an eCPM floor price on a variety of factors. They are based on individual ad units, geographic location, device type, and more.
Moreover, advertising operations teams consistently monitor it to ensure whether or not eCPM is working effectively. Monitoring here refers to the evaluation of pricing strategy in generating revenue.
Thus, publishers must define the eCPM floor price after very careful consideration. Incorrectly setting the price floor can lead to revenue loss for the publishers.
How do eCPM and Revenue Correlate with each other?
Think of it as two pieces of the puzzle that fit together. As we know, eCPM measures the amount publishers earn per thousand impressions. And the higher eCPM means ads are more valuable.
So, understanding the correlation between both is quite simple. The higher the eCPM, the more revenue publishers are going to generate. Advertisers are generally inclined to pay more to the publishers offering higher eCPM to display their ads. This translates to more revenue in publishers’ accounts.
However, there are plenty of other factors which are taken into account, including:
- Number of ad impressions
- Ad format
- Targeting criteria
The list goes on. Overall, a higher eCPM is a good indicator of more revenue potential.
Let’s now find out various factors that can impact eCPM.
Factors that Impact eCPM Rates
An eCPM does not always remain the same. Certain factors can lead to its fluctuation. Some of them are:
With the changing season, eCPM may fluctuate or vary. Most commonly, the time when it reaches its peak is the winter season. Events like Black Friday, Christmas, and New Year are when the competition for ad space is usually on the rise.
For Detailed Info – Seasonality Trends in Ad Tech Industry: A Guide for Publishers
The user experience of a website plays a crucial role in the overall engagement of a user with the website. One of the most important aspects of it includes website speed.
When the page load time goes from 1 second to 3 seconds, the bounce rate of a website increases by 32%.
Thus, it’s imperative to pay attention to your website speed to ensure whether or not the website content and ads are being served in a timely manner.
Also Read – 21 Website Speed Optimization Tools for Publishers
The ad format is another factor that ends up affecting your eCPM. As a matter of fact, a report has found that video ads have witnessed the highest eCPM rate across all advertising platforms. Not only that but there are plenty of aspects that the report has revealed.
Channel of Advertising
Next, it is essential to zero in on the channel of advertising you opt for. There are plenty of channels when it comes to advertising, such as native ads, video ads, and the list goes on.
Perform a thorough analysis and single out an advertising channel wisely. According to Meta Audience Network, native advertising can help get higher revenue.
Niche-specific websites can expect a higher eCPM rate than websites posting generic content.
Yes, you have heard it right. Location matters as well. Publishers targeting the top tier countries like the UK and the US tend to have higher eCPM rates.
Now that we’ve covered the factors that can impact eCPM rates let’s take a closer look at the factors that can potentially contribute to your suboptimal eCPM.
Why Is Your eCPM Low?
If your eCPM appears to be low every time, there can be several reasons behind it. Let’s have a look.
One of the potential reasons behind your subpar or below-average eCPM could be ad targeting. Ineffective ad targeting affects your eCPM and impairs user experience since the audience will not find the ads relevant. So, make sure you’re doing your part to help the advertiser reach the intended demographic.
Next, if you generally bombard your audience with too many ads, try tuning it down. Spamming visitors with so many ads irritate visitors, resulting in less engagement with the website content and an increased bounce rate.
If you’ve been relying on a particular type of ad format for a long time, it’s time you try different ad formats to find out what delivers the better results. Research has shown that app developers get higher eCPM interstitial ads since it receives the most engagement from visitors.
Website/ or App Engagement
The type of content, user experience, and ad relevance play a critical role in the users’ engagement with your website or app. If a user finds your website or app unexciting or dull and too many ads invade their way while navigating through your content, the chances of higher engagement will be much lower. So it goes without saying that one needs to work on their content and user experience to increase engagement, which helps boost the eCPM.
Ad Space Competition
Multiple advertisers bidding for the same ad space drive up the cost per impression, resulting in a lower eCPM for publishers.
Let’s understand this with an example.
Say two advertisers are bidding for the same ad space. One is willing to pay $2 per impression. On the other hand, another is only willing to pay $1.50 per impression. In this case, the winning bid may end up somewhere in the middle. This will result in a lower overall eCPM for the publisher if we compare the situation with only one bidder in the auction.
Quality of Ads
The quality of ads can make or break publishers’ efforts to attract higher eCPMs, and most importantly – visitors. To entice the advertisers, you need to ensure that the quality of your ads, including their format, placement, etc., are displayed correctly. Apart from that, make sure that the ads are not irrelevant and fit your target audience’s interests.
How to Increase your eCPM?
If you’re stuck with the same eCPM value for a long time, you can employ a few tactics and methodologies. Here are a few of them.
Focus on Increasing Traffic
More traffic means more impressions, which means a higher possibility of revenue. Thus, keep your focal point on increasing the traffic from search engines. This translates to churning out quality content that interests the users.
When you offer content that is valuable and resonates with the users’ intent, you’ll be able to gain more engagement. This also leads to more ad views and higher eCPM than websites posting subpar content.
Provide Data to Advertisers
Generally, advertisers are willing to pay a higher amount for targeted advertising based on factors such as gender, location, and age. It’s because this helps them to create personalized campaigns that drive user engagement.
In-app and mobile advertising channels provide advertisers access to valuable data points, which works well in crafting effective campaigns that generate high conversion rates. This demand for audience data translates into higher eCPM for app publishers who provide access to this information.
By prioritizing in-app and mobile advertising channels, advertisers can leverage the power of data to create highly targeted campaigns that resonate with users. This, in turn, drives engagement and increases the likelihood of converting clicks into sales. App publishers can take advantage of this demand by providing access to user data, thereby increasing eCPM.
Consider Adding More SSPs
Adding more SSP (Supply Side Platforms) in your ad stack can potentially help you increase the likelihood of getting higher eCPMs. Here is how.
SSPs work similarly to the ad network and ad exchanges. But they take the competition for your ad inventory to another level. When you add SSPs, there are greater chances of your ad requests being filled, leading to more ad impressions.
To put it in another way, SSPs gather many bidders to fill up your ad space, increasing the likelihood of your increasing eCPM.
Also Read – Top 15 Supply Side Platforms (SSPs) For Publishers in 2023
Experiment with Different Ad Formats
Improving your eCPM rate requires a selective approach to ad formats, as not all formats are created equal in generating high returns. While some formats may increase your eCPM, others can have a negative impact.
To optimize eCPM, publishers need to carefully assess and experiment with different ad formats to identify the most effective ones for their audience and content. It is also noteworthy that different ad formats resulting in higher eCPMs may not fit different platforms. Now that we know video ads work well for this purpose, it may not be ideal to fit in any app or website. Ensuring a great user experience here is what matters the most.
It’s all about combining the correct ad format, placement, and frequency to strike the perfect balance between user experience and revenue generation. However, remember that this requires careful experimentation and optimisation to determine the optimal combination for their specific audience and content.
Focus on Ad Viewability
Users need to view your ads. Thus, as a publisher looking to increase eCPM, you should leave no stone unturned to ensure none of your ads go unseen. Here are a few strategies you can work on to increase ad viewability.
- Prioritize Above-the-Fold Placements
- Choose High-Performing Ad Sizes
- Focus on Core Web Vitals
- Optimize Header Bidding
- Reduce Bounce Rate
- Consider Using Sticky Ads
- Implement Lazy Loading
So these were a few tactics you could implement to increase your effective cost per mile rate.
That wraps up our discussion on why your eCPM might be low and how to improve it. In conclusion, a low eCPM can significantly impact the revenue generated by your website or app. It’s essential for publishers to identify the aforementioned factors contributing to low eCPM and take the required steps to improve them.
Testing different strategies and optimizing your ad stack can increase eCPM, attract high-paying advertisers, and maximize your ad revenue. Remember, improving eCPM requires a long-term approach and ongoing testing and optimization to ensure that you continue to generate the highest possible revenue from your ad inventory.
In case the aforementioned information appears to be too complicated to carry out on your own, look no further than Geniee International.
Maximize your eCPM Potential with Geniee International
With their cutting-edge ad tech services and data-driven approach, they can help you uplift your eCPM and maximize your earnings. Providing a wide array of solutions such as heading bidding, yield optimization, ad management, Geniee International sticks to the thumb rule of constantly innovating and adapting to the ever-changing landscape of digital advertising.
Best of all, publishers can qualify for Geniee with 200,000 monthly page views, making it accessible for small-scale publishers as well. On top of that, Geniee comes with flexible revenue sharing, multiple payment methods, and a payment threshold of $100.
So, don’t let low eCPM hold you back – partner with Geniee International and commence your journey to success. Head to their Geniee International official website to know more.
Frequently Asked Questions – eCPM
To put it in a simpler way, eCPM is a metric that helps in measuring the performance of ad inventory by calculating the estimated earnings per 1000 impressions.
eCPM stands for effective cost per mile, or cost per thousand impressions, which estimates how much publishers earn per thousand impressions.
CPM (cost per thousand impressions) indicates the cost of an ad per thousand impressions. On the other hand, eCPM considers the revenue generated by the ad, which provides a more accurate measure of its effectiveness.