The Super-Massive Guide on Ad Server Metrics: Impressions, Clicks, Conversions, and So Much More

How do you calculate viewable impressions? What is CTR, and is it the same metric as ad clicks? How do you differentiate gross from AP Profit? Ad tech is not rocket science, but it surely looks like one, especially when it comes down to its metrics.

As a result, an ad tech beginner may have more questions than a rising child. Like with the latter, it’s hard to answer all of them, but today, we’re taking the role of responsible parents.

In this article, we explain (almost) every possible metric in your ad server account. Prepare for a looong ride.

What Are Impressions in Advertising?

Almost every metric we’re going to discuss refers to the “processes” happening with the ad, meaning how the ad is viewed, how much it is paid for, and what the ad campaign brings.

That’s why let’s start with the basic question: “What does the impression mean in online advertising?”

An impression is a metric that quantifies how many times the ad was displayed to a user.

The metric can be used for any piece of content online, but we’re naturally only going to discuss it in the context of ads. By the way, advertising impressions have another name – ad views. The latter is not particularly correct, and you’ll get why soon enough.

How Does an Ad Impression Work?

It’s not hard to guess, but an ad impression works by tracking an ad. That means that whenever the user “sees” an ad on a website or mobile app, the ad impression is registered.

The most common method of tracking an impression is a 1 × 1 transparent image called an impression pixel (or impression tracker). This image notifies an ad server of the registered impression.

The return of this impression pixel happens every time the browser renders the ad markup. That’s why if the user reloads the page and sees the same ad, two impressions are registered.

It doesn’t end here, as the ad server may track additional pixels in the ad markup from other ad tech platforms, but we don’t want you to fall asleep, so let’s move on.

Advertising Impressions vs. Clicks

An ad impression doesn’t necessarily imply a user clicking on it; they may just view it and completely ignore it.

That’s why think of an ad impression as how many times the ad was displayed, not how many times it actually caused interest. The situation is different with clicks, as the user needs (surprise-surprise) to click on the ad for it to be counted.

At this point, you should see the big downside of regular impressions. The advertiser doesn’t have any way of knowing if they pay for a potential lead or for a person who just happens to skip the ad. That’s why there are two types of advertising impressions.

Types of Ad Impressions

There are two types of impressions in advertising:

• Served impressions

Served impressions are traditional advertising impressions that indicate how many times the ad was shown.

Everything we’ve discussed so far relates to served impressions.

• Viewable impressions

What are viewable ad impressions? These are impressions created to help advertisers understand whether a user actually viewed their ad. This topic is much more vast, and we’ll come back to it in a second.

Before that, we have to discuss one more important thing.

Served (not viewable!!) ad impressions are the basis of the two most popular pricing models in advertising: CPM and eCPM.

What Is CPM?

Pricing models in advertising are hardly the essence of this article, but we’ll occasionally explain them since they are too important for the topic to simply skip.

CPM – cost per mile/one thousand impressions is the ancestor of all digital pricing models. Today, advertisers still heavily rely on it, but they mostly buy CPM ads to attract clients at the beginning of the sales funnel and build basic brand awareness.

How to calculate CPM:

CPM = (campaign cost / impressions) * 1000

The advertiser pays for impressions regardless of the result. The publisher receives revenue for ad views.

What is eCPM?

eCPM – effective cost per mile is the pricing model used by publishers. You see, different advertisers bid on ad impressions with different CPMs, so the price of each isn’t fixed. This confuses the publishers, as they can’t calculate how much total money they make.

Since eCPM is an average of all CPMs, this metric allows us to solve the issue.

How to calculate eCPM:

eCPM = (ad revenue earnings / total impressions) * 1000

The great thing about eCPM is that the publishers see their total ad revenue, which allows them to compare ad units, ad formats, and audiences to optimize their revenue better.

For now, let’s head back to the clash between viewable and served ad impressions.

What Is Viewability in Advertising?

The viewable ad impression implies that at least 50% of the ad is visible for more than 1 second for display ads or 2 seconds for video ads.

These impressions are the consequence of a discussion about viewability in advertising. You see, the advertisers don’t want to overpay for the ads that many people simply dont see, or even worse, the viewers may just be bots.

The publishers don’t want underperforming ads either, as fewer advertisers would buy their ad inventory. Viewable impressions allow both parties to avoid the issues.

Why May the Ad Not Be Viewable?

Low (or unnaturally high) viewability in your advertising campaigns can happen due to several factors:

• The user sees less than 50% of the ad;
• The ad is “viewed” by a bot, crawler, spider, or proxy server;
• The user operates a browser that doesn’t serve ads;
• The user has an ad blocker installed;
• The user leaves the page before viewing the ad (less than 1 sec on site);
• The user reloads the same page and sees the same ad.

How to Calculate Viewable Impressions?

If the campaign has low viewability rates, the other KPIs become simply irrelevant.

As for the viewability rates, they are expressed as a percentage of viewable impressions to their total number. Why is this piece of text not made bold? Because most ad tech instruments calculate viewability for you.

Plus, it’s not that easy. If we were to count everything manually, we’d have to take non-measurable impressions into account, which would be a whole different story.

For the most part, your ad tech/analytics tool will do a fine job calculating viewability rates; just don’t hope for 100% precision. What you really need to pay attention to in this case is vCPM. Hell yeah, viewable impressions have their own pricing model and don’t rely on regular CPM.

What is vCPM?

vCPM, or viewable Cost per mile, is the response to CPM. The advertiser gets charged based on 1000 viewable impressions rather than 1000 impressions served.

How to calculate vCPM:

vCPM = campaign cost / ((total ad impressions * Ad viewability %) / 1000)

We won’t bore you with math today; let’s just say that average values for viewable cost-per-thousand impressions are around $5. However, this really depends on the platform, the placement, and viewability.

The average viewability rate is 68%. The higher the viewability, the lower the vCPM, and vice versa.

vCPM vs. CPM: Which is Better?

It’s really hard to choose a clear winner in viewable impressions vs served impressions. vCPM is clearly more transparent, but not all publishers work with one. On the other hand, CPM is a really old metric that clearly has its flaws, but the ad tech industry doesn’t like changes.

Moreover, the difference is affected by other factors. What is your viewability rate? How about conversions and clicks? In any case, if you want to run impression-based campaigns, there is another metric you have to take into account, and that is advertising clicks.

What Are Ad Clicks?

Ad clicks or clicks is a metric that counts when someone clicks the ad.

Yup, it’s that simple. Understanding why clicks are important is a low-hanging fruit. The more clicks – the better users’ engagement.

What’s better is that there’s no global drama of viewable impressions vs. served impressions here. If the user clicks on the ad – he is most likely already engaged with it, and you shouldn’t be as worried about bots and low viewability.

How Do Ad Clicks Work?

Counting and registering ad clicks is done via a click tracker.

This is basically a URL of the ad server’s redirect service. When a user clicks the ad, it counts the click and returns the information to the ad server via ad markup while redirecting the user to the final landing page.

What’s important to note: the user doesn’t see any of the redirects or confront anything that could potentially worsen their browsing experience.

The process above registers the ad clicks for the publisher. If the advertiser wants to count these as well, one extra step is required. The publisher’s ad server has to send the click count to the advertiser’s ad server upon getting the ad markup and before redirecting the user to the landing page.

By the way, tracking viewable impressions and bots is also possible, but the parties just have to add more redirects.

If multiple click trackers are involved, the process is optimized via click URL macros. It’s not as scary as it sounds; a URL macro implies expanding the URL to organize the trackers in a chain.

What Is the Metric for Clicks?

While the concept of ad clicks is a no-brainer, it gets a bit more complicated when we discuss its related metrics.

Overall, advertising clicks are a metric on their own. They even have a fancy formula (which looks fancy only at first glance):

ƒ Count(Ad Clicks)

However, ad clicks are part of the formula for many advertising metrics, one of the most essential being CPC.

What is CPC?

CPC or cost per click is the advertising model where the advertiser pays and the publisher receives revenue when the user clicks on the ad.

Its most effective use happens in the middle of the marketing funnel when the users already know something about the product or service. Clicks are also an effective measure during campaign optimization.

How to calculate CPC:

CPC = campaign cost / clicks
or
CPC = (CPM / 1000) / (CTR / 100) = (0.1 * CPM) / CTR

The cost of clicks varies depending on the industry. The more competitive the vertical – the higher the costs. Expect prices from $ 0.10 to $ 0.40 on average.

What is CTR?

CTR or click-through rate is a metric (not pricing model) that defines the percentage of clicks on your link that generate impressions.

What exactly does CTR mean? Think of it as a super-efficient KPI metric that helps to benchmark how well an advertising channel performs.

CTR is a superstar among other ad metrics, and it probably deserves its own separate article, but not today. The CTR formula is as follows:

CTR = (number of ad clicks / number of impressions) * 100

What is a good CTR? Once again, it depends on your ad campaign; for search and display ads good CTR implies about 2% with slight fluctuations.

But what you should keep in mind is that click-through rates don’t equal conversions.

What Are Conversions in Advertising?

Desire is the root of all advertising…

Every advertiser desires the user to do a specific action, whether it’s a product purchase or service subscription. The conversion is just that. To put it in a more formal explanation,

A conversion is when the user acts in a way that the ads encourage them to.

Types of Conversions

There are two main types of conversions:

• CTC

Click-through is registered when the user clicks on the ad and converts. Clicks are the basis for this one.

CTC % = (conversions / clicks ) * 100

• VTC

View-through is registered when the user sees an ad, doesn’t click on the ad, but still converts.

For this one, we need impressions.

• VTC % = (conversions / impressions) * 100

There is no “good” CTC/VTC, the percentage varies a lot from the advertiser’s vertical and placement parameters.

How Does Conversion Tracking Work?

As stated, a conversion is registered when the user performs a desired action like purchasing a product, filling out a contact form, or downloading a report. There are two ways to track conversions which are viable both for CTC and VTC.

The Pixel Method

This one is similar to impression tracking. When the user converts after clicking on the ad, the conversion pixel records their cookie ID and sends it to the advertiser’s ad server.

For view-throughs, the advertiser has to compare the cookie ID when the ad was displayed and the one when the conversion pixel fires.

Served-Side Method

This server-side method works similarly, with the only difference being that instead of the pixel being responsible for passing the cookie ID, we have the good old redirects that send the information on conversion to the ad server.

What Is CPA?

Now, here’s the reason why we paid tribute to conversion tracking – cost per acquisition, the advertiser’s favorite pricing model. It’s not hard to deduce why. Advertisers pay exactly for the results with almost no nuance.

How to calculate CPA:

CPA = campaign cost / conversions

The best use case for CPA is the bottom of the sales funnel. Why? Because the user rarely takes action immediately upon seeing the ad. Once you, as an advertiser, have historical data, CPA is almost an obvious choice.

CPA is the most protected from bots and high-quality traffic, and thus, it's the most expensive ad pricing model.

Conversions vs Clicks

Both conversions and advertising clicks measure the effectiveness of your ad content, but they serve a bit different purposes. Some might claim that clicks are the beginning of the user journey, and conversions are the end of it, or that conversions are more important.

But really, the point here is balance.

For example, if you make a guide on OTT advertising, there’s no reason to hard-push converting CTAs in every passage of the text; the unqualified buyer will just leave without receiving the necessary information.

Your strategy should focus on clicks that boost brand awareness and conversions that attract qualified leads.

What Is I2C?

While we’re here, it would be dumb to skip on another popular metric, I2C or Imp Cvr, or if we’re speaking like normal humans – impression-to-conversion ratio.

I2C  = (Total number of conversions / Total number of impressions) x 100%

As the name suggests, this metric measures the rate at which impressions result in conversions. It’s yet another great way to understand what’s going on with your conversion ratios.

What Is Ad Request?

By the way, before measuring impressions, clicks, and conversions the ad has to actually be loaded on the webpage or app. This is exactly what the next metric is about.

An ad request is when a piece of code called an ad tag asks an ad server to show this particular user this particular ad.

We’ve already written a tract on how ad placement works, so there’s no point in repeating ourselves again. (Here’s a quick schema just in case)

One thing worth noting, however, is that request and delivery aren’t the same thing. The ad impression counts only if the ad is delivered (another surprise), not just requested.

Speaking of ad requests, you’d normally want to understand if the ad was or was not delivered. That’s why we have the following metric.

What Is Ad Fill Rate?

The fill rate in advertising is a metric that reflects the percentage of ad units served relative to the total ad requests sent to an ad server.

A 100% fill rate is a hard-to-achieve golden standard, meaning that every time there was an opportunity to show an ad, it was shown. A high fill rate generally increases a website's eCPM and earning potential.

However, missed ad opportunities happen if the user leaves the website before the ad loads, the page is timed out, or network issues between the ad server and publisher.

How to Calculate the Ad Fill Rate?

The fill rate formula in advertising is pretty simple.

Ad fill rate = (total number of ad impressions / total number of ad requests) * 100

While you should always strive to keep the ad fill rate as high as possible, it’s the contrary to the next metric.

What Is Ad Discrepancy?

The ad discrepancy is the difference between the number of ads that the publisher's ad server has sent and the number of ads that the advertiser's ad server received.

There are different ways to measure this one, but let’s stick to a simplified formula.

Ad discrepancy = 1 - (total ad impressions / total ad requests)

Discrepancy measures the loss of impressions between a publisher's ad server and the advertiser's server. As you will typically get paid based on the advertiser's numbers, it's important that your numbers match up.

But don't expect a perfect match!

A discrepancy of up to 10% is considered normal, but a lower percentage is always better. Basically, the percentage of discrepancy means that a proportional percentage of your impressions are wasted without being monetized.

It's possible to see a negative discrepancy, but as a rule, a negative discrepancy indicates a configuration error or timezone problem.

What Other Metrics Are There in the Ad Server?

Bear with us; we’re almost at the finish line. The next couple of metrics aren’t limited to ad tech, but they are still important parts of an ad server functionality. We’ll be quick with those.

• What Is CCR?

Customer churn rate is a metric that defines the percentage of customers who stop doing business with your company.

CCR = total number of customers lost divided by total customers started with.

You’re obviously interested in keeping this as low as possible; the metric exists to keep you notified about each given year quarter.

• What Is Gross Revenue?

Gross profit is the total amount of money you’ve made without any losses and costs deducted.

• What Is AP Profit?

AP Profit is the amount of money you’ve made, excluding the production costs. In our case, this metric shows how our advertising activities profited us, excluding the cost of ads (or not, if you’re a publisher).

• What Are Ad Charges?

Ad servers, unsurprisingly, charge fees for showing ads to people online. These fees depend on everything we’ve talked about so far.

Summary

If you’ve read up to this point – you’re truly a legend! With such determination and the knowledge from this article, the advertising game will be yours in no time.

By the way, each represented metric is taken from the Epom ad server. Epom’s software provides detailed and easy-to-use analytics on key ad server metrics.