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You’ve probably heard of CPM, but what is eCPM and why does it matter?
CPM, or cost per mille, is a metric to measure the cost of your ad campaign and is calculated per 1,000 impressions. “Mille” means thousand in Latin. eCPM, which stands for effective cost per mille, is how much ad revenue a publisher earns per 1,000 impressions served and is an important KPI in digital advertising because it shows the profitability of ad inventory.
Essentially, eCPM allows you to identify whether the ads served within your app are effective. A high eCPM means the ads served are driving conversions. By knowing fully how eCPMs are performing, you can optimize your monetization strategy and maximize budgets effectively.
When it comes to advertisers and UA, eCPM is useful to analyze the ad revenue generated by a particular campaign. Networks prioritize eCPMs with the highest revenue, which may result in a campaign to gain a bigger number of impressions faster. This measurement is used by advertisers, as it represents the value of an impression.
Since eCPMs are tied to revenue (typically, the higher the eCPM, the more profits you earn), it can be utilized in a few different ways. Setting a specific goal can motivate publishers to set up tests to find the best-performing ads. eCPMs can also help predict what future earnings may look like.
The calculation for eCPM is made by taking the total ad revenue and dividing it by the total ad impressions and multiplying that by 1,000.
Total ad revenue / total ad impressions *1,000
Many ad platforms calculate eCPMs automatically for publishers but it’s good to know how to calculate this number, especially if you use multiple ad platforms.
You can improve your eCPM by optimizing your monetization strategy or by other means, such as:
Increasing eCPMs can make a significant impact when you’re scaling your apps, so it’s worth figuring out how to maximize your monetization efforts.
The best software solution can help you achieve successful expansion in UA, in-app bidding, and reaching new audiences globally—AppLovin’s Growth Suite does all of this and more. Developers say they love working with AppLovin because our software helps them grow their business quickly and efficiently.