CPM vs eCPM – What’s The Difference?
One of the core digital marketing and mobile app metrics are CPM and eCPM.
CPM – also known as “cost per mille”, is a marketing term used to indicate the price of 1000 ad impressions on one mobile campaign or webpage. If a publisher charges $3.00 CPM, that means an advertiser must pay $3.00 for every 1,000 impressions of its ad.
With this metric publishers know how much revenue they can generate from 1,000 impressions.
eCPM is a calculated metric that tells you what the CPM would have been if you bought ad impressions instead of clicks, actions etc.
eCPM is mainly used as an ad performance metric, while CPM is used as a pricing and reach metric.
To read more about other important mobile game metrics you can click here.
The Main Difference Between CPM and eCPM
The term eCPM is very common in the online advertising world. New developers are trying to find new ways of increasing eCPM since it’s not the easiest thing to do. This is because bad results only come from bad and unoptimised strategies.
Most of the app developers are losing potential results just because they don’t keep track of eCPM. If you ask any developer if they want to increase their eCPM results, you would get a convincing YES from everyone.
Calculating eCPM is pretty simple and the formula goes like this:
If an ad produced $120 in revenue, after serving 200,000 impressions, the eCPM would be: 120/200,000 = 0.0006 x 1000 = 0.6. This means that the advertiser can expect to make $0.60 on every 1,000 impressions of that advertisement they purchase.
According to Max Freemynd if you buy interstitial impressions at $18CPM from a publisher, you pay $18 for every thousand impressions. If your budget is $18,000, you have purchased a million impressions. Now if the publisher delivers exactly a million impressions, your eCPM is exactly the same as the CPM, $18. But if the publisher delivers 1.5Million impressions (lots of bonus here J ) then the eCPM is calculated as such.
$18,000/1,500,000×1000 = $12 eCPM
So although you paid $18 CPM for the deal, because you got more impressions than what you agreed, your eCPM is lower.
For direct response campaigns and ROI, eCPM is definitely a superior metric than CPM. However there are situations where CPM is the best metric to use.
Forms of advertising that are primarily focused around brand awareness and don’t offer products to purchase can show best results with CPM.
Increasing your eCPM with Relevant Ads
The most important thing for increasing eCPM is placing relevant advertisements. If you know how to target your user base and showcase them advertisements that are made specially for them, your eCPM will grow. It’s important to understand what targets you want to hit. For example imagine having a user base that contains millions of fishermen. Showing an advertisement of a mobile game to them will probably not show much results.
CPM and eCPM are important metrics to follow if you developed a new mobile game. However if you have a good strategy and you’re willing to learn, eCPM is more important. If you have any questions just contact me on Facebook or comment down below!