What is eCPM and How It Is Calculated ?

what-is-ecpm-and-how-it-is-calculatedThe acronym eCPM stands for “Effective Cost Per Mille”. It is the outcome of a calculation of the ad revenue/earnings generated by an ad campaign, divided by the total number of ad impressions of that campaign expressed in units of 1,000.

Here ‘Mille’ stands for 1000 impressions. Mille is a Latin word which means 1000.

Let’s calculate it mathematically:

ecpm-calculation-formula

Now, you know the mathematical formula of eCPM, so, let’s try calculating eCPM for different pricing models (CPM, CPC, CPA). Calculation of eCPM differs for these pricing models, however, the basic formula remains the same.

Calculating eCPM For A CPM Campaign:

Calculating eCPM for a CPM campaign is easy as it is identical to the CPM rate offered by an ad network or advertiser. Which simply means the CPM rate offered by the advertiser or ad network will also be your eCPM.

For Example: Suppose an advertiser offers you 1$ as CPM rate for his campaign. Which simply means he will pay you 1$ for every thousand impressions. So, your eCPM will also be 1$.

Let’s calculate it mathematically:

For calculating eCPM for a CPM campaign we need two things:

  1. Total Ad Revenue
  2. Total Ad Impressions

So, Let’s first calculate total ad revenue.

Total Ad Revenue= Number of blocks of 1000 impressions X CPM rate.

Number of blocks of 1000 impressions = Total number of impressions delivered / 1000.

So, let’s calculate the eCPM for a CPM campaign.

Suppose you have delivered 10,000 impressions in one day and the CPM rate is 1$.

So, number of blocks of 1000 impressions = 10,000/1000 = 10

Total Ad Revenue = 10 X 1 = 10$

Total Ad Impressions = 10000

Now we have all necessary units, so, we can calculate eCPM:

calculating-ecpm-for-cpm-campaign

From the above results you can clearly see that the eCPM obtained is identical to CPM rate. So, whenever you get CPM rate then there’s no need to do much. Its simply the eCPM for the campaign.

Here, you are getting 1$ for 1000 impressions and therefore, 10$ for 10,000 impressions.

Calculating eCPM For a CPC Campaign:

Calculating eCPM for CPC campaign is also not difficult. However, here the formula for calculating total ad revenue changes.

Total Ad Revenue = Total number of clicks X CPC rate.

Suppose, you have delivered same 10,000 impressions in one day and generated 100 clicks. And the CPC rate is 1$.

Then your eCPM would be:

Total Ad Revenue = 100 X 1 = 100$

Total Ad Impressions = 10,000

Now, we have all necessary units to calculate eCPM, so, we can calculate eCPM for CPC campaign.

calculating-ecpm-for-cpc-campaign

Here you can clearly see that we are getting 10$ for every 1000 impressions. And, there for you can further calculate that you are getting 100$ for 10,000 impressions.

Calculating eCPM For a CPA Campaign:

Calculating eCPM for a CPA campaign is also simple. Only the formula for calculating total ad revenue changes and rest remain the same.

Total Ad Revenue = Total number of conversions X CPA rate

Suppose, you have delivered 10,000 impressions and generated 10 leads. And, CPA rate is 100$.

Total Ad Revenue = 10 X 100 = 1000$

Total Ad Impressions = 10,000

Now, we have all necessary units to calculate eCPM for a CPA campaign, so, our eCPM would be:

calculating-ecpm-for-cpa-campaign

 

It means we are getting 100$ for 1000 impressions. This way are getting 1000$ for 10,000 impressions.

I think now you have understood what eCPM is, but do you know eCPM is not the right terms for publishers/affiliates. As you know the acronym eCPM stands for “Effective Cost Per Mille” but there’s no cost involved for publishers/affiliates.

eCPM is a way for advertisers to calculate the success of an ad campaign.

Then what’s the right term for publishers ?

The right term for publishers/affiliates is eRPM as they generate revenue. The acronym eRPM stands for “Effective Revenue Per Mille”.

What is eRPM ? And How It Is different From eCPM ?

As i already mentioned above the acronym eRPM stands for “Effective Revenue Per Mille”. And, since publishers/affiliates generate revenue, so, eRPM is the correct term for them.

Actually, eRPM and eCPM means the same and have same formulas to calculate them. The only difference is, how we think of them. Advertisers look for the cost involved in advertising and therefore, they think in terms of eCPM whereas, publishers/affiliates look for revenue and therefore, they think in terms of eRPM.

Since, eCPM and eRPM mean the same and have same formulas for calculation, so, ad network and affiliate networks started using a common term eCPM and therefore, it is more common as compared to eRPM.

In this article i have tried to simplify everything, i hope you have enjoyed this article.

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