The eCPM Playbook: How to Analyze This Metric and Boost Your Revenue

The world of digital advertising is complex, with multiple factors affecting ad performance. At the same time, every publisher’s goal is quite simple: maximize the revenue. But where to start? Where is the end of the thread we must pull to untangle this knot?

Let’s start with the critical metric – eCPM. After reading this article, you’ll know what it is, how to calculate it, and what factors affect it. But most importantly, you’ll understand why some ads perform better than others and how to optimize your efforts, increasing revenue.

What Is the eCPM Meaning?

CPM is one of the most familiar abbreviations for marketing professionals. It means cost per mille, or cost per thousand impressions. CPM is a helpful tool for measuring the cost of an advertiser's campaign, but what about publishers? That's where eCPM comes into play!

Let’s start with a definition. eCPM stands for effective cost per mille, and publishers use it to calculate the revenue they could potentially receive from placing an ad on their websites. Why not just measure CPM instead? The short answer is that the price for a thousand impressions doesn't always equal the revenue.

Also, if a publisher runs not just CPM but also CPL, CPC, and other types of campaigns, eCPM takes all of them into account. After all, a publisher must get the revenue for a thousand impressions, some of which may include clicks, leads, etc. So, eCPM can be applied to various pricing models.

It's essential to keep in mind that eCPM is an estimate, not a precise amount of money a publisher will receive. Nevertheless, eCPM is an extremely helpful metric. One of its advantages is the possibility of testing several versions of an ad, calculating eCPM for each of them, and deciding which option to proceed with. Eventually, this approach helps optimize a publisher's revenue.

The difference between CPM and eCPM

What’s the eCPM Formula?

Finding eCPM is pretty straightforward: you need to divide the total ad revenue by the total number of impressions, then multiply by 1,000:

For instance, if a banner earned $300 a day and received 30,000 impressions, then the eCPM value would be $10.

As you can see, the calculation of eCPM doesn’t require any other data except for the ad revenue and the number of impressions. It means that a publisher can use it with any pricing model.

What Is a Good eCPM?

No answer fits all. You may consider eCPM good based on the specific context. In particular, here are some factors affecting your judgment:

• Industry standards. Some industries have higher eCPM than others. For instance, ads on tech-related websites may bring more revenue than ads on entertainment websites.
• Geographical location. Some markets are much more expensive than others. For instance, a good eCPM for US traffic may vary from $5 to $10, and for India, $0.5 may be good enough. Some other countries with higher eCPM are Germany, the UK, Japan, and Australia. And countries like Brazil and Egypt have much lower eCPM rates.
• Placement. eCPM will be quite different depending on the ad’s place on the website. For example, if the banner is above the fold, it will get more impressions and generate more revenue.
• Website’s speed. The faster the page loads, the better the visitors’ experience is, and the higher the chance of showing them an ad in time.
• Seasonality. For many brands, holidays are the hot time. No wonder ad campaigns will cost more around Christmas, Black Friday, Halloween, etc. Hence, publishers can earn more due to competition among advertisers.
• Ad format. For instance, video ads cost more than images. Therefore, video ad campaigns will have higher eCPM. Also, banners normally have the lowest eCPM. To increase eCPM rewarded video and interstitials may come in handy. It makes sense: customers are more inclined to click on a video ad if it has a proper call to action.
• Audience. With good targeting, ads can be more profitable because a narrow audience is more perceptive than a general one.
• Channel. For example, native ads are most often responsible for higher revenue than display ads.
• Customers' engagement. If a website has a warm audience and frequent visitors, placing an ad there may result in higher revenue.

As you can see, it makes sense to consider various factors before deciding on a "good eCPM" size. Also, you may want to look at historical data and trends in your niche. In this case, your estimation will be as precise as possible.

What Is the Average eCPM?

The formula for calculating the average eCPM is simple: divide total revenues by total impressions and multiply by 1,000.

As with a good eCPM, the average eCPM is influenced by many factors. You can’t expect the average eCPM to be the same on different websites in different industries, with varying loading speeds, etc. If you still need a rough estimate, the average eCPM is often within the $4-$10 range, especially for display ads.

A more productive approach is to find an industry average or eCPM of similar websites and compare your average eCPM to these numbers. In this case, you can understand how well you’re doing and, if necessary, plan your steps to increase eCPM.

Also, it is always a good idea to compare your current results to historical data. Consider counting the average eCPM over a certain time and then analyzing the dynamics. This can usually provide valuable insights.

Finally, sometimes, focusing only on the average eCPM may be deceptive. How so? The thing is that the average number consists of high and low data points. If you only take into account the average, you can’t see what brings you the highest revenue and what holds you back. So, in addition to monitoring the average eCPM, it’s beneficial to analyze the data behind this indicator.

What Is an eCPM Floor?

An eCPM floor, sometimes also called a flat eCPM, is the minimum price advertisers must bid to place their ads in a certain space on a publisher's website. Lower bids aren't acceptable. If advertisers suggest bids higher than an eCPM floor, they participate in the auction.

A publisher defines an eCPM floor. In programmatic advertising, this metric helps publishers guarantee a minimal suitable revenue. Several factors impact the decision on an eCPM floor value, such as the audience relevance, a publisher's financial goals, and the ad space location.

The main purpose of an eCPM floor is to set a threshold that is not too high or too low. If a publisher wants to increase revenue and sets an eCPM floor too high, there's a good chance no advertisers will reach the threshold. So, the auction won't happen, and the publisher won't get any reward.

Eventually, an eCPM floor reminds of a reality check: it helps balance a publisher's revenue expectations with the real market value of the ad space.

Why Do I Have a Low eCPM?

If you believe your eCPM could be higher, there may be a reason for it – or even several reasons. What exactly can lower your eCPM?

• The lack of competition. If your market is not yet developed, programmatic advertising may seem like a challenge to its players. It results in lower eCPM rates.
• Too much competition. In well-developed markets, the opposite problem may occur. When you compete with other publishers, you must ensure the high value of your ad space.
• Seasonal fluctuations. Before jumping to conclusions, make sure your eCPM is not affected by a typical seasonal trend. Historical data and industry research will bring you the answers you need.
• Poor user engagement. Do not expect high bids if you can't bring a relevant audience to your website or fill it with quality content. In this case, you need a strategy to increase the value of your offerings. For example, work on better targeting and experiment with new ad formats.

Also, the rise of ad blockers creates obstacles for publishers. To overcome them, you must have a wide range of ad formats, mostly non-intrusive, and build trust with your visitors. If you succeed, you can encourage them to turn off ad blockers.

One more suggestion: remember to work on improving compatibility. The better your ads look on various devices and in different browsers, the higher your chance of improving your eCPM.

How to Increase eCPM?

So, you’ve already conducted a thorough analysis and calculated your eCPM. Now, the main question is how to boost it to earn more. Here are some steps you can take to construct your own strategy as a puzzle:

1. Become a part of more than one ad network. If you partner with different networks, you’ll increase the chances of attracting more advertisers. Competition is good for eCPM value, remember? Joining some networks is a great way to scale the competition up. But first, do your research and find the best networks for your industry and country/region.
2. Work on your traffic. The more traffic your website gets, the higher your reward. The connection is obvious: advertisers want to place their ads where the maximum amount of people will see them. Hence, you need a traffic acquisition strategy combining various tactics.
3. Experiment with ad formats. If you currently use only banner ads, consider trying video or rich media ads. Conduct A/B testing and find out what works best with your audience. When analyzing the results, ask yourself: what formats got the most attention from advertisers? How did eCPM change? After a series of experiments, you’ll be able to come up with an optimal set of formats that bring you higher revenues.
4. Improve ad viewability. First, calculate your viewability rate. For example, Google defines this metric as the percentage of time when your ad appeared on sites or apps with Active View enabled and was viewable. For advertisers, placing an ad where customers won’t see it is pointless. So, to attract the best advertisers, you need to increase your viewability rate.
5. Experiment with layouts. As mentioned, ads above the fold cost more and have higher eCPM. But where precisely above the fold? You can test different layouts with different numbers of ads. But remember, too many ads on the page will negatively affect your revenue.
6. Enhance user experience. If a visitor is uncomfortable on your website, they won’t stay. And if you can’t attract enough organic traffic, it will be hard to maintain partnerships with ad networks. To prevent such a scenario, ensure your loading speed is high enough, your usability is good, and the quantity of ads is decent.
7. Optimize your website. First, utilize the benefits of SEO optimization. It can bring you organic traffic and, therefore, increase your eCPM. Second, optimize your website for mobile devices. Every year, they generate a bigger and bigger share of traffic. So, your efforts will pay off very soon.
8. Try a supply-side platform. It allows you to work with several networks simultaneously. Plus, its tools may help you increase eCPM and revenue.

Even if your current eCPM meets your expectations, there’s always room for improvement. After all, the market is constantly changing. So, you need to keep trying new things to stay ahead of competitors.

Also, for more recommendations, watch our video about increasing eCPM.

How Can eCPM Help in Revenue Analysis and Optimization?

Since eCPM is an essential metric for a publisher, it provides numerous opportunities for analyzing and optimizing the performance of your ad inventory. How to do it?

Step #1, start by accumulating data on your participation in different ad networks. Collect performance data on different ad formats, ad locations, etc. The more data you have, the better (but only if you know how to interpret it).

Step #2, compare the eCPM rates to uncover what truly brings you the most enormous revenue. For instance, some ad formats may generate higher total revenue than others, but until you compare the eCPM rates, you won’t see the accurate picture. So, collect the data not just on total revenue but on impressions, too. And then calculate eCPM.

Step #3, decide which ad formats generate the most revenue and create a strategy for efficiently utilizing their strengths. This will help you optimize your efforts and get the highest possible return.

Learning how to define, calculate, and increase your eCPM is beneficial for every publisher. If you know the difference between eCPM rates for different ad formats, you can enhance your website advertising potential. And if you understand why the highest total revenue doesn’t automatically equal the highest eCPM, you actually get a chance to significantly boost your earnings.

New programmatic tools allow you to do it faster and more efficiently. You can use Epom Ad Server with various pricing models, monitor your performance, and increase your revenue.

FAQ

• What does eCPM mean?

  eCPM means effective cost per mille, or cost per thousand impressions.

• What is eCPM?

  eCPM is a key metric for publishers. It allows you to calculate the revenue you can potentially receive from placing an ad on your website.

• How to calculate eCPM?

  Divide the total ad revenue by the total number of impressions, then multiply by 1,000: eCPM = (total ad revenue / total impressions) x 1000

• What is a good eCPM?

  It depends on the context. Many factors impact the value of a good eCPM, including industry standards, geolocation, ad placement, the speed of your website, seasonality, ad format, and the quality of your audience.

• How to increase eCPM?

  To increase eCPM, you can try participating in several ad networks, improving traffic, experimenting with different ad formats, increasing viewability, enhancing user experience, and using other tactics.