eCPM | How to Earn more from the ‘effective cost per mille’

eCPM is one of the most important revenue metrics publishers need to track Google AdSense Ads performance. Not forgetting, choosing the right Google AdSense Ads for your website could get tricky. But, through the jmexclusives previous article on step by step in automated adverts, you too can achieve the right schemes.

And if you are using Google Adsense Ads on your blog or website, you already know how important it is. Especially, in the realization of the exact ads which are generating the most revenue. May it be a particular page, or a particular ad slot or an ad of a specific size, etc.

Google AdSense for Beginners

After all, Google, the US-based tech giant, owns different products and platforms. Among them, there are AdWords and AdSense. Whereby, advertisers bid for advertisement and publishers shows advertisement, respectively.

In addition to website traffic, there are more conditions, that you should have to fulfill before you start making money with Google AdSense. Like an active Gmail account and a Google-friendly website. Therefore, AdSense means a platform where interested publishers show advertisements on their websites, videos or apps.

Before you proceed, you can learn more about What is Google AdSense Program?

What is eCPM?

By definition, eCPM stands for “effective cost per mille.” And it’s how much an advertiser pays for an ad space per unit of 1,000 ad impressions.

In fact, Mille is a Latin word that means a thousand. In other words, eCPM is one of the most important KPIs in Mobile Marketing and Mobile Advertising. For one thing, it shows how lucrative certain ad spaces, apps, and other dimensions are. And with a full understanding of eCPM, publishers can optimize their monetization strategies.

eCPM

Basically, eCPM is calculated by dividing the ad revenue by the number of ad impressions and then multiplying the quotient by 1000.

Most ad platforms will calculate eCPM automatically for publishers. However, it’s still useful to have a good understanding of how to calculate this metric.

A publisher, for example, can calculate their average eCPM across multiple ad platforms. With this in mind, below are a few examples to show you how eCPM is calculated.

First eCPM Example:

For instance, if a banner ad in a mobile game reaches 100,000 impressions and generates $150 in revenues for the app publisher, the eCPM would be calculated as follows:


($150 ÷ 100,000) × 1,000 = $1.50


Meaning that the mobile game publisher earns $1.50 for every 1,000 ad impressions.

Second eCPM Example:

Now let’s say that the same mobile game also serves rewarded video ads.

If these ads reach 40,000 impressions and generate $200 in revenues for the app publisher, the eCPM would be calculated as follows:


($200 ÷ 40,000) × 1,000 = $5


Therefore, the eCPM for rewarded video ads is $5 in this case.

You may now try one of these calculations on your own.

What Is the Difference Between CPM and eCPM?

Always remember, the acronyms CPM and eCPM can’t be used interchangeably. Since, eCPM is the cost for 1,000 ad impressions regardless of the purchasing method.

eCPM Formula

For example, eCPM can be calculated for campaigns that purchased on a Cost Per Click (in short CPC) or Cost Per Acquisition (in short CPA) basis.

In that case, it makes eCPM a useful metric for comparing costs across different types of campaigns. Whether they purchased on a CPM-basis or not.

Cost Per Click (CPM)

Of course, it’s hard not to focus on a metric such as a Cost Per Click (CPC). For one thing, it stares you in the face every time you do keyword research or adjust your bidding. Oh, Yes! This term costs Kshs. 10,000 per click. While at the same time, that term costs Kshs. 2,000 on other metrics.

CPC is the other most common campaign model in online digital marketing. In this model, the publisher earns money each time a user clicks on the advertisement.


Cost Per Click = Advertising cost/number of clicks


If you want to use a popular online advertising tool like Google AdWords and bid on keywords in order to display paid ads, these tools will often show CPC for target keywords. 

Cost Per Action (CPA)

As for Cost Per Action (CPA), the publisher is compensated when a user completes an action. Such as making a purchase or filling out a form.


CPA = Cost to Advertiser divided by Total Acquisitions (or Actions)


In short, the CPA is the type of buying model users in an auction. eCPM is the metric itself to show how much 1,000 ad impressions earn.

Before you proceed, read more about Cost Per Click | How to Increase your Campaign Rates.

Why is eCPM useful?

This is where the smart marketer differs from the rest. eCPM can help evaluate the performance of each channel while not jeopardizing reach. The better the marketer, the lower your eCPM can be without sacrificing overall performance.

By understanding how these metrics are calculated can help you ensure that you are buying effectively with the best buying model. You should look at balancing your different objectives, reaches, and outcomes in order to determine the best possible eCPM.

Marketers should look to what levers they can adjust to help balance their eCPM metrics across all their digital advertising campaigns. This approach will help marketers set clear business objectives, enable effective campaigns, and measure success to find the most cost-efficient paid channels.

What is Good eCPM?

eCPMs differ a lot depending on where the ad is placed (above the fold or below the fold), your traffic geography (tier one such US, UK tend to be higher), seasonality, site speed, user engagement, and even your niche.

In general for a publisher monetizing with display ads, one can expect an eCPM range of $4 – $10. But as I mentioned, it all depends on several aspects. Like varying across channels, audience, industry, and a lot of other factors.

Some of the variant factors include:
  • The type of creative asset: Video assets will be more expensive than a standard display ad.
  • The reach of your target audience: If your target audience is very niche, it can cost more than targeting a broad audience.
  • Channel: The advertising channel like search vs. display vs. social vs. sponsorship vs. others.
  • Competition: The amount of competition you have for the same target audience will impact the price you’ll pay for those users.

Given your digital advertising strategy can sometimes vastly different than another. It should go without saying, you are the best person to judge a “good eCPM.” Based on your campaign objectives and targeting strategies.

Should you look for the lowest CPM? Not always the best idea. You should think about what you’re trying to accomplish with your digital advertising strategy.

What lowers eCPM?

There can be many reasons for low eCPMs or poor ad earnings. This can include displaying ads from an ad network that does not correctly support your traffic geography or utilizing a poor ad network. Or, not having enough advertiser competition for your traffic.

Also, you might have a slow website, a bad ad layout or you’re not utilizing the correct ad units. It could even mean having some pages banned from your ad network and not displaying ads correctly.

Since eCPM can be used on so many platforms, each with a different set of users, rules, ad networks, and ad servers, there is no one size fits all solution. To improve your eCPM means that you will need to optimize your ad monetization strategy, whether it’s for display advertising via desktop or through your mobile app.

How do I Increase eCPM to Earn More Revenue?

Some publishers only look at total daily/monthly revenue to track their progress. Others monitor metrics like CPC, eCPM or rCPM (RPM).

By all means, even a small increase in eCPM can make a huge difference when considering scale. Let’s assume you have a popular app with one million ad impressions per day.

Obviously, a small eCPM increase of just 5 cents means $100 per day — or roughly $3,000 per month.eCPM

But, driving up eCPMs makes a significant impact over time. So, it’s worth the effort to optimize your monetization strategy. Below are a few steps to take to boost eCPMs.

1. Provide Advertisers With Valuable Data

As a matter of fact, Advertisers pay a premium to target specific audiences, such as by gender, location, and age.

It’s this type of data that helps advertisers craft personalized messages to users, and it’s one of the reasons why advertisers prefer in-app over mobile web and desktop.

This data is what makes an advertiser’s campaigns successful so that app publishers can make the most of this demand.

Just how much of an impact can user data make on eCPMs?

I dove into the data on the Smaato Platform to see the difference.

  • Apps that passed location data had +70% higher eCPMs and +50% higher fill rates on average.
  • Music apps that included gender data had 210% higher eCPMs. Age data resulted in 155% higher eCPMs.
  • News apps with location data earned 87% higher eCPMs than apps that didn’t.

Depending on your type of app, it might make a lot of sense to collect this user data to drive up eCPMs to new heights.

2. Try To Achieve A High Viewability Scale

To simply put, viewability is an important subject in online digital advertising. Whereby, Advertisers want to ensure that their ads are actually being seen. And will pay extra to quality apps that are achieving high viewability rates.

How to Increase eCPM

This is what happened with iFunny, an app using the Smaato Publisher Platform (in short SPX).

And through bypassing data about their high viewability to advertisers, they were able to access new advertisers.

Luckily, this allowed them to double ads revenues quarter-over-quarter.

3. Work On Display Ads Engagement

Viewability, as defined by the Media Rating Council (in short MRC), is fulfilled under the following requirements in the case of a display ad.

  1. At least 50% of the ad’s pixels were in the viewable space of the device.
  2. The duration of this pixel requirement is at least one continuous second, post ad render.

For video ads, the requirements are similar except that the ad must be played for at least two seconds.

So, what can be done to give advertisers the viewability they’re looking for?

First, it partly comes down to having engaged users, as they would be more likely to sit through an ad.

Secondly, the other part of the solution is to make sure there are no technical issues with your app. Such as latency and improper formatting of the ad spaces.

4. Experiment With The Best Ad Formats 

When it comes to eCPM, not all ad formats are equal, particularly with video ads.

Some ad formats generate much higher eCPMs than other ad formats, and that’s especially the case for video.

As an example, see the graphic below on how lucrative video is compared to banner ads.

eCPMs of Different Ad Formats

As lucrative as video can be, it’s not ideal to focus exclusively on this ad format if it doesn’t fit well with your app. What’s more important is catering to the user experience.

Providing the right combination of ad format, placement, and frequency can help you find that sweet spot of what works for the user and what generates the highest revenues.

Note: Banner ads are criticized for offering low eCPMs. However, banner ads shouldn’t be written off when it comes to creating an effective monetization strategy. Fortunately, banner ad spaces are desired by advertisers. As they’re inexpensive, easy to create, and can reach a huge audience.

5. Work With The Right Monetization Partner

Lastly, one of the most important steps in increasing eCPMs is to work with the right Monetization partner.

Ideally, the right monetization partner offers the following:

  • Access to relevant demand that can connect your inventory to well-paying advertisers
  • Easy integration
  • High standards of ad quality to protect the user experience
  • Experienced account managers who can help you maximize eCPMs

The right partner, combined with an optimized monetization strategy, can help you raise your eCPMs significantly. Even an incremental increase makes a huge impact on revenues.

Takeaway,

There is a lot to digest and take into consideration while choosing the optimal perspective for programmatic monetization. Even more so to look for key factors standing behind unexpected drops in performance.

My advice is to stay aware of seasonality, track any upcoming big changes, and monitor rCPM or RPM on a daily basis. By doing this. you’ll stay in control of your inventory performance.

Since we’re talking about apples, I’d like to describe the characteristic of ad requests as a product, and factors that make a big difference in terms of our potential to monetize them. Think of the marketplace as more of an Apple than an iPhone.

With the iPhone, you have something unique. The competition is not so vast, and demand in all markets is more or less the same. In this situation, you can set a price for one handset/user and keep it more or less at the same level throughout several months. With ad requests, we have a different situation.

Ad requests have big competition, which is constantly growing because of new publishers entering the market. Their ad requests are similar to ours. They are seasonal products, and prices strongly depend on the amount of supply on the market. It is also fragile and responsive to unexpected events or even catastrophes.

What do you think about eCPM? Please share your thoughts below. If you’ll need additional support, feel free to Contact Us.

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