Effective cost per mille, or eCPM, is the money a publisher (app owner) receives for each 1000 ad impressions that are shown on their app. This metric is used by publishers to assess the effectiveness of their campaigns and get the most out of their ad space.
How does eCPM differ from CPM, and what does it mean?
Effective cost per mille (thousand), or eCPM, is a statistic that app owners, also referred to as “publishers” in the app marketing ecosystem, employ. Surprisingly, eCPM counts revenue even though it uses the word “cost.”
Advertisers pay publishers to display their ads in apps according to the in-app advertising model. This is frequently done on a “per mille” basis when advertisers pay a predetermined amount for 1000 impressions (views) of their advertisement.
Publishers receive eCPM for these impressions. It aggregates all of the money it makes from different marketers utilizing its inventory.
Publishers evaluate the effectiveness of their adverts using eCPM. User acquisition (UA) and monetization are the two facets on which this operates.
Publishers utilize eCPM to evaluate the earning potential of their ad real estate when it comes to monetization. An elevated eCPM indicates that the advertisements being served are effectively converting users. Publishers are able to charge more for ad space since it becomes more competitive.
eCPM is a UA metric that quantifies the amount of money an ad campaign brings in. When serving ads, ad networks utilize estimated cost per thousand (eCPM) to rank campaigns. Higher eCPM campaigns are shown more prominently and frequently, which helps them quickly gain impressions and scale.
CPM vs. eCPM
eCPMvs.CPM, or cost per mille, are sometimes confused. In reality, they are really two sides of the same coin: marketers use CPM to limit their spending, and publishers use eCPM to track their income.
To allocate funds and optimize campaigns, marketers pay a fixed fee known as CPM for every 1000 impressions of their advertisement.
In contrast, eCPM is a dynamic calculation that is influenced by supply and demand.
Consider the scenario where your app has two locations with a 100,000 ad impressions each. On average, nevertheless, Spot A outperforms Spot B in terms of click-through rate. Because of this, Spot A is now more competitive than Spot B. Advertisers will pay a $3 CPM to feature here, whereas Spot B only charges $2. The entire amount you earn based on the CPM of each advertiser is displayed by your eCPM.
This moves us nicely to the next…
How is eCPM calculated?
The formula below can be used to calculate eCPM and is your straightforward answer to how is eCPM calculated? :
(Total revenue / Total impressions) x 1000 equals eCPM.
Assume that your app serves 200,000 ad impressions and generates $700 in revenue from ads per day. This is how your eCPM would be determined:
$1,000 × ($700 / 200,000) = $3.5 eCPM
Put differently, as a publisher, you make $3.5 for every 1,000 impressions.
To ensure that app publishers get the most out of their advertising space, eCPM is crucial. Let’s examine this metric’s advantages in more detail.
Make the most money from your impressions.
It’s critical to understand which impressions bring in the most money. It implies you can make the most out of those top ranks while also looking into potential reasons for others’ underperformance. Are they on unnoticed pages or in awkward places? Make sure that every impression matters by optimizing your design.
Find the most valuable advertisers.
Advertisers that find success with your ad space are likely to pay for the right to use it again. Additionally, there’s a good likelihood of success if their captivating advertisements connect with your target demographic. You can even choose to deal directly, bypassing the intermediary ad exchange, with your top advertisers.
Analyze the effects of modifications to your app.
It seems fantastic to update the content or look of your app, but make sure that doing so won’t reduce ad revenue. Your eCPM will increase if you make any changes because it indicates that users are responding more favorably to the advertising you are delivering. If it declines, users are interacting with it less, and your updated app may be the reason.
Try out various ad formats.
You can test out various ad formats by comparing your eCPM. For instance, is a video more effective than a static banner? Knowing which formats are most effective can help you draw in the appropriate sponsors at the correct costs.
Estimate income
Effective planning and budgeting are made possible by having a solid basis for predicting and optimizing income over time, which comes from knowing your current eCPM and being able to compare it across months or years.
Benefits of eCPM for advertisers
While publishers are the primary users of eCPM, advertisers may also benefit from it by using it to measure the efficacy of a campaign and the value of an impression.
Advertisers may choose that it is worthwhile to pay more cost-per-click (CPM) for the most competitive locations. This is because ad networks will give priority to those adverts due to their higher eCPMs. They will so continue to succeed and gain more recognition.
eCPM flooring
Advertising networks bid on available inventory when using programmatic advertising. Publishers can set an eCPM floor (also known as a flat eCPM or predetermined CPM), which is the lowest CPM bid that an advertiser or ad network needs to meet in order for their ad to be displayed, in order to safeguard their revenue.
The highest bidder typically pays $0.01 more than the next-highest bidder.
There’s a catch, though. Only in cases where the winning bidder is higher than the pricing floor does it take effect. Put another way, the ad won’t be served and money will be wasted if none of the bids reach the minimum amount that the publisher has specified.
Geographical areas, ad formats (such as rewarded video, banner, or interstitial), sponsors, device types, and even individual ads can all have their own eCPM floors specified. It’s imperative to continue keeping an eye on them because choosing the incorrect floor pricing can cost you money. Setting a floor price for one network and a lower floor price for another is one method to get around this. That way, in the event that neither wins the bid, you have a backup plan. However, are eCPM floors going out of style? eCPM floors will probably lose significance when the mobile app market transitions from a hybrid bidding system to pure in-app bidding monetization.
What constitutes a quality eCPM?
As is frequently the case in eCPM marketing, every company and campaign will have a different definition of “good.” Furthermore, not all of the variables that can affect eCPM are under your control.
Geography: Compared to areas with lower expenses, established markets such as the US and Europe typically have higher eCPMs.
Seasonal factors: During holidays like Black Friday or Christmas, advertisers usually purchase more impressions.
Format and placement of eCPM advertising: eCPM ads that are positioned higher up the page (or “above the fold”) typically receive more impressions and, as a result, fetch a higher eCPM. Likewise, interactive or video advertisements frequently have greater conversion rates, which raises eCPM.
Web pages and apps with a quick load time receive higher impressions. You can be losing users and lose out on eCPM if yours is operating slowly.
Audience: You can charge more for advertising when your user base is more engaged, as this will increase the frequency with which they return to your app. Apps that cater to a specific specialized population typically have high levels of interaction, which helps you find advertisements that align with their interests.
You may gauge how you’re doing right now and what you can reasonably aim for by considering these variables and tracking your eCPMs over time.
eCPM maximization: recommended procedures
Consequently, larger is better in terms of eCPM. Now that you are aware of some of the variables that may affect this measure, let’s examine some strategies for raising your eCPM.
Make use of several ad networks
Avoid putting every one of your eggs in one basket. You may fill your inventory more quickly and get more competitive prices by collaborating with multiple ad networks, especially if you select networks that focus on your expertise or region.
Boost awareness
The secret to increasing your eCPM is to get more people to view your advertising. Increasing the use of apps is the most obvious approach to achieving it. Make sure your software is sticky enough to draw in new users and improve your app store listings. Next, determine which ad positions work best for you so that you can improve your layout. Even try using sticky advertisements, which follow visitors around as they scroll to keep their attention.
Select the most successful ad formats.
Examine the performance of various formats to see which converts best, then use that format more often. You can compare several ad formats, including banners, interactive content, and video, and try out various sizes and layouts.
Make your in-app bidding profitable.
Programmatic advertising uses an approach called in-app bidding, in which app publishers simultaneously auction inventory to several ad exchanges and sell it to the highest bidder. (The term header bidding refers to the equivalent for websites.) In this manner, you draw in the largest CPM-paying advertisers, increasing your eCPM.
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Key Takeaways:
The acronym for effective cost per mille is eCPM. App publishers use this indicator to display the total revenue generated from all of their ad impressions.
Take your total revenue, divide it by the total number of impressions, and then multiply the result by 1000 to get your eCPM.
Because ads with a higher eCPM are more successful at capturing consumers’ attention and converting them, publishers are able to charge more for the space. Ad networks also prefer ads that generate high eCPMs because it allows them to grow quickly.
While marketers use CPM (cost per mile) to determine how much they are ready to pay for each impression of an advertisement, publishers are the primary users of eCPM.
You may monetize your impressions, draw in high-value advertisers, and forecast revenue by tracking your eCPM. It’s useful for evaluating app updates and testing different ad types.
An eCPM floor is a minimum bid that publishers will take from advertising.
Remember to take audience, loading speed, ad placement and format, geography, seasonality, and other aspects into account when evaluating your eCPM and setting targets.
in-app bidding to attract the highest-paying advertisers and collaborate with several ad networks to optimize fill rates in order to increase your eCPM. To get more impressions, try to enhance app usage as well as determine which ad styles and locations generate the highest conversion rates.
Important Elements Affecting eCPM
Relevant, high-quality ads have a tendency to engage people more successfully, increasing conversion rates and click-through rates (CTR). Engaging ad content is frequently rewarded by platforms with lower prices, which boosts eCPM.
eCPM is likewise impacted by audience targeting’s relevance and specificity, however there may be a trade-off that makes sense. For instance, ads with a narrower focus may be more expensive initially, but if they increase engagement and conversion rates, they may result in a cheaper cost per acquisition and more revenue.
A Good eCPM: What Is It?
According to trends, depending on the details of the campaign and targeting criteria, search engine advertising often varies from $20 to $50, social media platforms typically have eCPMs between $5 and $10, and display ads typically have an eCPM between $2 and $10. Generally speaking, anything below these limits would be regarded as a Good eCPM.
What Constitutes a Poor eCPM?
A poor CPM is usually more than $50, particularly on sites like search engines where costs are frequently artificially driven up by competition for terms. This high cost per thousand impressions points to one of three possible scenarios: a very competitive market; platforms that prioritize making money from ads over offering value; or inadequate targeting that results in excessive spending on visibility.
How eCPM Benchmarks and Objectives Are Set
A good place to start is by knowing the typical eCPM for a certain platform, ad kind, and industry. That being said, there’s not always a universally applicable definition of what constitutes good or terrible when it comes to eCPM.
Start by compiling information on previous campaigns and industry averages in order to create personalized benchmarks. To determine the current range, look at past eCPM figures and then contrast them with the industry data that is now available. This comparison aids in setting realistic objectives for upcoming campaign enhancements. To establish adaptable and realistic benchmarks, take into account the effects of market rivalry and seasonal variations on eCPM rates.
