What is eCPM?
To define eCPM it is important to know what it stands for: effective cost per mille.
It assists in identifying the top-performing ads and those that have lower performance rates. eCPM (effective cost per thousand impressions) is a metric commonly used for measuring the effectiveness of advertising campaigns. Out of the surveyed group of consumers, approximately 76 percent indicated an increased probability of engaging with an advertisement if it was relevant to them, while 69 percent of respondents stated that they were more likely to notice ads that appeared to be contextually aligned with their current circumstances.
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 and 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 effective cost per mille 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 effective cost per mille, 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.
The amount of ad space available on an app can significantly affect the demand, which in turn affects the effective cost per mille.
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 effective cost per mille and where you should focus your advertising efforts.
- Optimising 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 eCPM. Prioritise partnerships with advertisers who offer high-quality ad creatives that align with your audience.
- Ad Format Optimisation:
Once you have successfully identified high-performing ad formats the next step is to focus on optimising their placement, size, and creative elements. This helps maximise their impact.
- Ad Load Optimisation:
Too many ads end up overwhelming users. Find the right balance between ad revenue and user experience by carefully considering ad load.
- Data Analysis:
Analyse 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:
Interactive and video ads may be pricier than static, boring, and unattractive ads, but they’re significantly more effective and captivating. Studies show that video ads generate up to three times more engagement than static banner ads and therefore provide higher eCPMs for publishers.
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 effective cost per mille 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 the right floor price is 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.
FAQs
1. How Do You Calculate Your App’s eCPM?
To calculate eCPM for your app, divide the total ad revenue generated by the app by the total number of impressions served to users of the app (i.e., ad views) and multiply by 1000. This formula helps you to see how much revenue your app is making per one thousand impressions of ads served.
2. What Causes Fluctuations in eCPM Rates Over Time?
eCPMs fluctuate from advertiser(s) and seasonality depending on the demand, how many users are engaged with an ad and how many ads will be shown. Seasonal events can generate significant user engagement, which can create competition, resulting in increased bids for advertisements, thereby increasing the eCPM value associated with your account.
3. What are Some Things You Can Do To Improve Your Apps’ eCPM?
By optimising ad placement, using high quality ads (particularly video), targeting profitable audiences, improving user engagement with your application and partnering with reputable ad networks that will bring in top advertisers to your application, you will improve eCPM.
4. What is the Difference B/W eCPM & Revenue Per User?
The difference between eCPM and revenue per user is that eCPM reflects revenue generated through 1,000 impressions, whereas revenue per user reflects earnings generated through each (individual) user of your audience. The two combined give you better insight into your monetisation efficiency, and the value of your users, than either metric alone can provide.
5. Is eCPM Important for Publishers?
eCPM is valuable for publishers because it aids in assessing the effectiveness of their advertising inventory in generating revenue. It helps them gain insight into the success of their ad campaigns, which provides them with the information they need to make sound optimization decisions based on maximizing their advertising revenue while also considering providing their users with a good user experience and long-term success.