- 28 Mar
- Brad Hagmann
CPMs & eCPMs
Even in an era where most industries and businesses rely on too many acronyms, digital advertising may take the cake.
CPM, eCPM, RPM, CTR, KPI … what does it all mean?
Today we’re breaking down the most basic of ad tech acronyms. The one that lays out how you earn money, how partners value your inventory, and how we optimize that inventory: CPM.
What is CPM?
The definition of CPM is simple. CPM stands for cost per mille (cost per thousand), or the unit used to define the price of 1,000 ad impressions. For example, if an advertiser pays a $2.25 CPM, that means they’re willing to pay $2.25 for every 1,000 times an ad is shown.
“Why isn’t the price per ad? Why per 1,000?”
If we use the same $2.25 CPM example, this would mean each of those 1,000 impressions would have cost the advertiser $.00225 cents. Multiplying that by 1,000 makes for a more standardized and useful measurement tool.
How does Mediavine use CPM?
Think of CPM as a pricing tool. On a broad scale, Mediavine uses CPM to set pricing with our ad partners.
We set floors with those partners, giving them a minimum price, or reserve price, that they must pay in order to buy ads on your site. We have the ability to tweak this pricing depending on the ad unit, ad type, device type or geographic origin of traffic. And that’s CPM advertising in a nutshell.
What is eCPM? Is it the same thing?
It’s not the same, although it is related. Whereas the CPM is a pricing tool, the eCPM is more of a measurement tool.
eCPM stands for “effective cost per mille” … but you can also think of it as average cost per mille, or average CPM.
The eCPM can be used to measure anything: Mediavine as a whole, the average of multiple ad units, a single ad unit over a period of time, and so on. Our publishers can look at eCPM each time they log into their dashboard.
In the example below, the CPM circled in blue represents the average CPM, or eCPM, of that specific ad unit over the period of time set in your dashboard.
The CPM circled in red, meanwhile, is the eCPM of all of your ad units over that time.
As you can see, the CPM varies across multiple ad units, but by averaging all units into an eCPM, in this case $1.83, we can gauge overall site performance.
How Does Mediavine use eCPM?
So. Many. Ways.
We can use it to compare a specific site to the averages of all Mediavine publishers. If these numbers are lower, it could indicate a problem – and a roadmap to boosting ad performance through a variety of optimizations.
More broadly, looking at the Mediavine-wide eCPM helps us analyze the impact of seasonality, technology changes, the addition of ad partners and other factors.
Given the sheer volume of ad units, ad exchanges and publishers we work with, the combinations of eCPM measurements are literally infinite – and infinitely valuable.
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