written by Maurizio Crisanti
eCPM is one of the most important metrics in digital advertising. We’ve often heard of CPM, but what’s the difference between CPM and eCPM? CPM is an essential metric for advertisers and so is eCPM for publishers, i.e. editors who offer digital spaces to show ads, just like Google does with its Display network, or other networks. In few words, CPM is the cost spent by advertisers on a campaign and eCPM is the estimated revenue of publishers, generated per thousand views. Let’s see in detail what it is, how to calculate it and how to optimize it.
What is eCPM
eCPM is the metric that quantifies the performance of an ad based on revenue for publishers coming from 1,000 impressions, and stands for “effective Cost Per Mille (i.e. thousand impressions)”, some of which are also clicked and converted into leads or sales for advertisers. ePCM is used on many platforms that monetize through display ads: among these, we mention the publications visible on the desktop, on mobile devices, on in-app spaces and on videos. The higher the eCPM value, the more publishers will earn with their ad units. eCPM is also a valuable metric for advertisers, since it indirectly quantifies the success of an Advertising campaign.
How to calculate the eCPM
The formula to calculate this metric is:
Total Ad revenue: Views x 1000 = eCPM
For example, if over a certain period of time (year, month) an ad was viewed 10,000 times and brought in 50 euros in revenue, you must divide the revenue by the number of impressions and multiply it by 1000. The result is 5 euros. Can we consider it as a good eCPM? Net of the variables related to geographical aspects and many other factors, it is estimated that an average eCPM fluctuates between 3 and 9 euros.
Professionals use tools, offered by Google – which alone manages about 90 percent of Display ads – to make predictions on the eCPM before choosing the ad with the highest eCPM forecast, which indirectly suggests the most successful one among ads. These are just predictions, of course, but they are a valid element to make data-driven decisions regarding the distribution of ads with greater viewing and conversion perspectives.
How to improve eCPM
How can publishers and editors improve eCPM values? Here are some strategies able to increase this valuable indicator:
1. Using SSP platforms to improve eCPM
Supply Side Platforms (SSPs) allow publishers to earn money from their website networks by creating and selling advertising space to advertisers. A sort of auction is therefore generated in real time between the Ad Inventories, the free spaces of the publishers, and the offers of the advertisers. The platform verifies the coincidence of some parameters with each other, in particular the desired target, and brings together supply and demand. In this way, publishers can show their offers on several platforms and advertisers can organize Programmatic Advertising campaigns.
2. Proposing ad formats to advertisers by following trends
From simple banners to video ads, ad formats evolve over time, and some achieve better results than others. Users frequently change their behavior and technology is constantly evolving, so a publisher is called upon to keep up with industry trends and shift advertiser demand towards specific ad formats. Today’s best performing formats may not be the same tomorrow, so you need to be ready to upgrade your monetization strategies. In order to be constantly updated, publishers generally monitor the average CPM and eCPM of different sectors, relating to various formats.
3. Generating traffic through SEO and Social Networks
The greater is the number of visitors to the network websites, the greater is the possibility that users view and interact with ads. Not all traffic sources have been shown to increase eCPM. However, many tests confirm that the traffic generated by search engine rankings helps improve this indicator. Through good SEO it is possible to bring visits to network sites, with the effect of improving interaction with ads.
4. Providing audience data to advertisers
Advertisers incur costs to target ads to specific audiences, typically based on their location, age and gender. This type of data especially helps advertisers create customized messages for users and is one of the reasons why many advertisers prefer in-app and mobile advertising space rather than other advertising channels. By sharing the data of the public browsing the publisher’s site network, the ads will be successful, thus increasing eCPM.
Moreover, Social Media can help make content go viral. In this way, visits to the site increase, with significant repercussions on eCPM. Instagram and Facebook were born to encourage the sharing of content among users. So by proposing valuable content, social platforms can be used to bring new views to publishers’ web pages and to ads inserted in the content’s context.
We can conclude by stating that, it is not possible to achieve a high eCPM without testing various ad network networks, different ad placements, various formats and all strategies to increase traffic on the network of sites. This function can be automated through Datalit, the technological framework that optimizes eCPM thanks to AI. DataLit allows you to identify the most qualified user segments to create new, more granular targeting opportunities for advertisers.