What Is RPM? How Does Mediavine Calculates It?

If you’re a publisher breaking down your income, you’ve probably come across the term RPM.

RPM is a common metric used to gauge monetization and performance among content creators. While this term is commonly used in our industry, there isn’t one standardized definition – businesses and individuals may use or apply it differently.

Below, we’ll explain how Mediavine defines and calculates RPM and why.

What is RPM?

RPM stands for revenue per mille – earnings accrued per 1,000 units (mille is thousand in Latin). It is the most commonly used metric by publishers in programmatic advertising.

This is not to be confused with CPM (cost per mille), although the two are related.

Running ads costs advertisers money, so they use CPM to measure those costs.

Those ads earn publishers revenue, which is measured by RPM.

That’s the textbook definition, which is simple enough, but as we said above, RPM can be used differently in ways that make it more complicated, even controversial.

How Mediavine Calculates RPM

RPM sounds unambiguous – earnings per 1,000 units. The issue is that a unit can mean a lot of things in our industry. Pageviews, impressions, sessions, and unique visitors all measure one’s traffic but in very different ways. Using RPM to analyze the same earnings divided by any of those will produce varying results.

So the question becomes: Which of those units should you use, and why does it matter?

Mediavine uses sessions to calculate RPM and evaluate relative monetization. 

The reason is simple: We believe sessions — which encompass the interactions a user has on a website within a specified time frame — paint the most complete and accurate picture of overall traffic and earnings compared to pageviews and other metrics.

In using sessions for these calculations, Mediavine treats RPM holistically as a means of improving each content creator’s user experience and earnings. 

Why We Use Session RPM 

Let’s say you improved your website’s user experience by running fewer ad units, optimizing content, and improving site speed. 

More than likely, your pages per user and average session duration will increase, while your website’s bounce rate decreases. 

This would all be fantastic, but if your RPM is calculated by pageviews instead of sessions, it likely won’t show much improvement.

That’s because each subsequent pageview is less valuable to advertisers than the first.

Here’s a scenario to illustrate this in numbers:

Let’s say that you increase pageviews per user by 20%, from 1,000 to 1,200. Your sessions, meanwhile, remain constant at 800. As a result, let’s say your total revenue increases 10%, from $10 to $11.

Note that the revenue didn’t increase by 20% along with pageviews. Advertisers pay more for the first pageview and less for each one that follows. 

In this example, if calculated using pageviews, your original Revenue / Pageviews x 1,000 ($10 / 1,000 x 1,000) comes out to a $10 RPM. Yet after you improved your site, and those numbers changed to $11 / 1,200 x 1,000, you’re at a $9.16 RPM.

That doesn’t make the most sense to us. 

Instead, look at what happens when using sessions to calculate RPM (same math, different unit: Total Revenue / Sessions x 1,000).

Using the above example, the original RPM was $12.50 ($10 / 800 x 1,000). After our user experience improvements, the RPM improves to $13.75 ($11 / 800 x 1,000).

This is simplified but illustrative of why Mediavine uses sessions to paint a more accurate picture of how readers use your site and how advertisers spend on it.

User experience — and a holistic ad experience to match it — matters. The goal is to get your audience to spend more time on the site and come back again and again, and session RPM is the metric we believe is most in line with that goal.

Comparing one website’s ad performance to another’s is always tricky – there are too many variables that influence RPM on an individual site basis to even list here.

Using different units of measurement in calculating it, however, is guaranteed to skew results in wildly divergent ways, to the point of becoming apples-and-oranges comparisons. 

No two sites are the same, and not every publisher or ad management provider uses the same formula. Instead, we recommend turning your attention to what improvements you can make to your site holistically for audiences and advertisers alike.

On our end, Mediavine is laser-focused on helping content creators balance user experience with revenue and accurately reflecting this in the RPM you see in our dashboard.