eCPM (Effective Cost Per Mille)

eCPM, or effective cost per mille, is a key metric for app owners (publishers) to measure the revenue earned from every 1,000 ad impressions displayed on their app. This metric is crucial for evaluating campaign performance and maximizing the value derived from ad spaces.

What is eCPM and How Does it Differ from CPM?

eCPM stands for effective cost per mille (thousand), a metric that, despite its name, measures revenue rather than cost. Publishers use eCPM to understand the earnings generated from ad impressions across their inventory. In the in-app advertising ecosystem, advertisers pay publishers to display their ads, often on a "per mille" basis, meaning a set price is paid for 1,000 ad impressions. eCPM aggregates the revenue from all advertisers using the publisher's inventory, offering a comprehensive view of ad performance.

Publishers use eCPM to evaluate both monetization and user acquisition (UA)

• Monetization: High eCPM indicates strong ad performance, allowing publishers to charge more for ad placements. • User Acquisition (UA): eCPM helps rank campaigns in ad networks, with higher eCPMs leading to more prominent ad placements, increasing impressions and campaign scale.

eCPM vs. CPM

While eCPM is used by publishers to track revenue, CPM (cost per mille) is used by advertisers to manage spending. CPM represents the predefined cost advertisers pay for every 1,000 ad impressions, aiding in budget allocation and campaign optimization. eCPM, in contrast, is dynamically calculated, reflecting the impact of supply and demand on revenue.

Calculating eCPM

eCPM is calculated using the following formula: eCPM = (Total Earnings/Total Impressions) ×1000 For instance, if an app earns $700 from 200,000 ad impressions, the eCPM is: (700/200,000) ×1000=3.5 This means the publisher earns $3.5 for every 1,000 ad impressions. Benefits of eCPM

For app publishers, eCPM is vital for maximizing the value of their ad space. Key benefits include

• Effective Monetization: Understanding which impressions generate the most revenue helps optimize ad placements and design. • Identifying High-Value Advertisers: High-performing ad spaces attract repeat advertisers willing to pay more. • Evaluating App Changes: Monitoring eCPM helps assess the impact of app design or content changes on ad revenue. • Testing Ad Formats: Comparing eCPMs of different ad formats aids in identifying the most effective types. • Predicting Revenue: Historical eCPM data helps forecast future earnings and plan budgets.

eCPM Benefits for Advertisers

While eCPM is primarily a publisher's metric, it also benefits advertisers by highlighting the value of impressions and the effectiveness of campaigns. Advertisers might opt to pay higher CPMs for competitive placements that yield higher eCPMs, ensuring greater visibility and success. eCPM Floor In programmatic advertising, publishers can set an eCPM floor, the minimum CPM bid required for an ad to be displayed. This ensures a base level of revenue but also risks losing impressions if bids don't meet the floor. Publishers must balance setting a competitive floor price to avoid lost revenue.

What Constitutes a Good eCPM?

A "good" eCPM varies by business and campaign, influenced by factors such as geography, seasonality, ad placement and format, loading speed, and audience engagement. By considering these variables and tracking eCPMs over time, publishers can set realistic goals and benchmarks.

Best Practices to Increase eCPM

• Use Multiple Ad Networks: Diversifying ad networks fills inventory faster and secures competitive rates. • Increase Visibility: Boost app usage and optimize ad placements for more impressions. • Choose Effective Ad Formats: Test and implement the best-converting ad types. • Implement In-App Bidding: Auctioning inventory to multiple ad exchanges attracts higher-paying advertisers.

Key Takeaways

• eCPM measures the revenue per 1,000 ad impressions for app publishers. • Calculation: Total earnings divided by total impressions, multiplied by 1,000. • High eCPM indicates effective ads and allows publishers to charge more for ad space. • CPM vs. eCPM: CPM is a spending metric for advertisers, while eCPM tracks revenue for publishers. • Factors Affecting eCPM: Geography, seasonality, ad placement and format, loading speed, and audience engagement. • Improving eCPM: Work with multiple ad networks, increase app visibility, choose effective ad formats, and utilize in-app bidding.

By understanding and optimizing eCPM, publishers can effectively monetize their ad space, attract high-value advertisers, and predict future revenue.