What is eCPM?
To define ecpm it is important to know what it stands for: effective cost per mille.
It helps you figure out which ads are the most popular and which ones aren’t working that well.
This information can help make the app even more profitable.
How Does eCPM Work?
Effective cost per mille, is one of the most important metrics for app owners/publishers.
This metric refers to the revenue generated for every 1000 ad impressions. In other words, it is the metric that helps you gauge how much money an app is making through ads alone.
When a publisher allows ads to run on their app, they get paid by the advertiser for each impression.
Effective cost per mille combines the total revenue earned from all these advertisers and calculates the average amount earned for every 1000 ad impressions.
eCPM vs CPM
It is important to understand the difference between eCPM vs CPM.
While they might sound similar, they represent different perspectives.
CPM, that is cost per mille, focuses on the advertiser’s side. It basically refers to the amount an advertiser pays for every 1000 ad impressions on a publisher’s app.
Effective cost per mille focuses on the publisher’s side. It refers to the amount a publisher earns for every 1000 ad impressions on their app.
Calculating eCPM Using the eCPM Formula
Calculating eCPM is quite simple actually, all you have to do is apply the eCPM formula, i.e.:
eCPM = (Total Ad Revenue / Total Ad Impressions) * 1000
So, for example, if you earn $100 from 20,000 ad impressions, your effective cost per mille would be:
($100 / 20,000) * 1000 = $5
Factors Affecting eCPMs
There are a number of factors that affect an app’s e c p m meaning it does not depend on a single factor alone.
- Ad Formats:
Different ad formats such as banner, interstitial, video, etc, affect eCPMs in different ways.
- Ad Placement:
The visibility and the CTR (click through rate) of the ad is affected by the placement of the ad on an app.
- Target Audience:
The kind of audience that predominantly uses an app can have an effect on the effective cost per mille since different user demographics impact advertiser interest.
- Ad Network:
eCPM can also be affected by the ad network you partner with.
- Ad Inventory:
The amount of ad space available on an app can significantly affect the demand, which in turn affects the eCPM.
Benefits of eCPM
- Identifying High-Performing Ad Spaces:
Effective cost per mille allows you to understand which ad placements within your app generate the highest e c p m and where you should focus your advertising efforts.
- Optimizing Ad Placement:
By understanding which ad placements are less effective, you can improve their visibility. If an ad placement does not seem to work out for you, at all, you can even consider removing them altogether. This is important to ensure that every ad impression contributes to the overall revenue.
- Enhancing User Experience:
Although boosting revenue is one of the most important things, offering a positive UX to users is also crucial. It is important to ensure that ad placements do not disrupt the user’s experience when using the app.
- Leveraging Ad Quality:
Advertisers whose ads are engaging and relevant to their audiences are often able to achieve a higher e c p m. Prioritize partnerships with advertisers who offer high-quality ad creatives that align with your audience.
- Ad Format Optimization:
Once you have successfully identified high-performing ad formats the next step is to focus on optimizing their placement, size, and creative elements. This helps maximize their impact.
- Ad Load Optimization:
Too many ads end up overwhelming users. Find the right balance between ad revenue and user experience by carefully considering ad load.
- Data Analysis:
Analyze past performance to understand trends, seasonality, and other patterns. This information can help estimate future revenue and make informed budgeting decisions.
What Makes a Good eCPM?
A higher effective cost per mille means more ad revenue.
But it can change based on a bunch of factors which include:
1. Where the Ad is Located:
Ads at the top of an app (above the fold) are much more visible, so they usually bring in more revenue.
2. Geographical Factor:
Apps in countries like the US or UK often have more visitors, so advertisers are willing to pay more to reach those audience bases.
3. Seasons and Seasonal Trends:
During special events like Black Friday or Christmas ad rates can soar really high. It is a popular time to advertise, so competition goes up and so do prices.
4. App Load Speed:
A slow app annoys users and leads to a high bounce rate. If your app loads quickly, people will stick around longer and advertisers will be more interested in showing their ads.
5. Engaged Users:
Advertisers want to reach loyal customers that already love your app which is why they are willing to pay more for ad space.
6. Different Ad Formats:
Video ads and interactive formats are more expensive but they are also much more engaging and effective than regular boring ads.
7. Exclusive Access:
If your app has a specific audience (like gamers or foodies), advertisers who want to reach those people will pay a premium price.
To understand if your effective cost per mille is good, you need to compare it to others.
Look at how your effective cost per mille changes over time, compare it to similar apps, and see if it’s going up or down.
Remember, a good eCPM is all about progress, not just a number which is why it is important to keep experimenting, learning and improving constantly.
What is eCPM Floor?
An eCPM floor is the lowest price you’re willing to accept for every 1,000 ad views (impressions) on your app.
When advertisers want to show ads on your app, they place bids. The highest bidder usually wins. But in case the highest bid is lower than your floor price, no ad runs.
An eCPM floor can also prove beneficial since when you set a minimum price, you make sure that you are earning what your ad space is worth.
Also, you have complete control over your ad inventory. You decide who gets to advertise on your app. This helps maintain the quality of your app’s experience.
It is important to understand what is the right floor price for you, and it takes some experimenting.
If your floor price is too low, you might get a lot of ads but at really low prices.
On the other hand, If your floor is too high, you might miss out on great ad opportunities.