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In marketing, there are a lot of acronyms that are used. And oftentimes it’s hard to keep track of them all. Two of the most commonly confused ones are eCPM and CPM. So let’s take a look at what they mean and how they differ from one another.
eCPM measures the revenue generated from online ads on publishers’ sites by monitoring ad performance. The eCPM metric can be confusing to publishers because there is also a metric called CPM. Once you’ve finished reading this article, you won’t confuse the two again.
In this article, we’ll discuss how you can calculate eCPM, how it can be analyzed, and how it can be optimized. The term eCPM stands for effective cost per mile. It is calculated by dividing ad revenue per banner or campaign by the number of ad impressions.
‘Mille’ means ‘thousand’ in Latin. It can be used to measure the effectiveness of an ad based on revenue generated per thousand impressions.
Read on to learn the difference between eCPM vs. CPM
To help you understand eCPM vs. CPM, let us take a look at what eCPM is.
Advertisers use effective cost per mille (eCPM) to calculate the monetization performance of their ads. Using this metric, analysts can gauge the success of ads based on how much revenue they generate per 1,000 impressions.
Advertisers use ad impressions to measure engagement with their customers, such as views or clicks. Publishers can use eCPM to test different ad displays and decide which type of ads to use on their platform based on how they perform.
The eCPM will allow publishers to revise their advertising strategy so they can maximize their profit. An eCPM that is high indicates that a publisher is making more money from their ads. To determine the ones with the best eCPM, you can test different ad formats, such as:
They can also change the placement of their ads to increase engagement, raising their eCPM. Here are some examples of eCPM:
This formula can be used to calculate eCPM:
eCPM = (X ÷ Y) × 1,000
where:
X = Total ad revenue
Y = Total impressions
Let’s say your total ad revenue for a single day is $300, and you receive 100,000 impressions.
eCPM = ($300 ÷ 100,000) × 1,000
eCPM = 0.003 × 1,000
eCPM = $3
Let us look at what CPM is to better understand the eCPM vs. CPM confusion.
The term cost per thousand (CPM) refers to the price per thousand advertisement impressions on a single web page. A publisher charging $2.00 CPM means that advertisers pay $2.00 per 1,000 impressions of their ads. The “M” in CPM stands for “mille,” a Latin word that means “thousands.”
As a marketing term, cost per thousand (CPM) refers to the cost an advertiser pays per one thousand impressions of his or her advertisement.
Impressions are a measure of how many times an advertisement is viewed or engaged with. Other methods of pricing online ads include cost per click (CPC) and cost per acquisition (CPA). Advertising fraud, duplicate views, and failure to load ads are disadvantages of using CPM.
Below are some examples of CPM:
CPM = (X ÷ Y) × 1,000
Where:
X = Total cost of an ad campaign
Y = Total impressions
Let’s say you have 50,000 total impressions in an ad campaign that costs $50.
CPM = ($50 ÷ 50,000) × 1,000
CPM = 0.001 × 1,000
CPM = $1
Now that you know what CPM and eCPM are, how do they differ from each other? Let us take a look at how these two metrics are different to end the eCPM vs. CPM debate.
Since they have similar names, many people confuse CPM and eCPM, especially beginners. However, if you plan on entering the world of digital advertising, you must understand their differences.
CPM is concerned with the cost of an ad per thousand impressions. On the other hand, eCPM is concerned with the revenue generated by a thousand impressions.
In marketing, CPM is crucial since it helps advertisers determine which platforms are viable for publishing ads. However, the effective cost per thousand ad impressions indicates the publisher’s ad revenue.
A CPM is usually calculated at the beginning of a campaign, while an eCPM is calculated at the end. Let’s now compare eCPM vs. CPM as follows:
| eCPM | CPM | |
| Full Form | Effective Cost Per Thousand Impressions or Effective Cost Per Mille | Cost-Per-Mille or Cost Per Thousand Impressions |
| Used By | Publishers | Advertisers |
| Formula | (Total ad revenue / Total ad impressions)*1,000 | (Total campaign budget / Total ad impressions)*1,000 |
| Purpose | eCPM measures publisher earnings per 1,000 impressions and predicts their income. | CPM enables advertisers to compare prices of various publisher inventories and bid fairly. |
Both eCPM and CPM are useful metrics for advertisers and publishers to evaluate, optimize, and maximize their campaigns.
The key difference between eCPM and CPM is that eCPM accounts for ad revenue generated by an impression. CPM focuses on the cost of an impression. Advertisers can use the two metrics differently, but both are important to monitor.
It is clear from the above discussion that marketing campaigns depend on a variety of factors. If you’re using a PPC platform, then getting good results and generating excellent revenue is essential. For this, you should continually monitor your campaigns, including measuring impressions and clicks from all sides.
Since eCPM and CPM are both dependent on impressions and clicks, you have to focus on them constantly. However, monitoring is not an easy task without the use of marketing tools. It is, therefore, a good idea to use PPC Signal for this task. This tool makes it easy to analyze your campaigns. The following are some of the benefits of PPC Signal:
PPC Signal’s use combination of metrics and dimensions and brings small changes to the surface for your critical analysis. Competitors of PPC Signal work on predefined domain rules and provide recommendations based on those rules.
Most PPC Signal’s competitors offer analytics based on the same metrics that are used to generate signals. PPC Signal, however, provides users the flexibility to analyze any metrics in the chart for better decisions.
Let’s look at how to analyze PPC signals as follows:
As you can see, PPC Signal gives you the information in the form of signals. On the left side, there are important filters that you can use. Let’s discuss one of the most crucial filters:
The above image shows how you can get information about impressions and clicks when you select them. By clicking on the Explore button, you can access graphical information about your signals. There is much you can find in PPC Signal like anomalies, outliers in your signal etc. all these features outranked this tool with other marketing analytics tools.
The effective cost per thousand impressions. The eCPM represents the revenue you receive for every thousand impressions of your ads.
For publishers monetizing with display ads, eCPMs are typically between $4 and $10.
A high CPM score typically tells you that you’re running a weak campaign and there’s room for improvement to boost your ad views.
There are many factors to consider when determining a good CPM. These are factors such as the type of ad network you use e.g.
The average CPM for Google search ads is $38.40. The average CPM for Google display network ads is $3.12.
So eCPM vs. CPM can be a bit confusing. However, understanding the difference between eCPM and CPM is important for digital marketers to know. The two terms are closely related, but they don’t always mean the same thing.
The eCPM is the average amount of money you make per 1,000 impressions. The CPM is the cost per thousand impressions. You might be asking yourself which one is better?
Well, it all depends on your business goals and where you’re advertising. If your goal is to get more clicks, then CPMs are probably best for you. But if you want to maximize revenue, then eCPM might be a better option for you.
A marketing campaign’s effectiveness goes beyond impressions and clicks. If you are using a PPC platform, you need to continuously monitor from all angles. However, monitoring is not easy without a marketing analytics tool, which is why PPC Signal is a great tool.
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