What is CPM, eCPM and rCPM – DigitalAdBlog.com
Learning about Digital Advertising: Think Small..
The digital advertising landscape is an ever changing ecosystem with thousands of interconnected elements, buzzwords, technologies and people who make it all work each and every day. If you are new or a veteran of the industry, it is always important to brush up and practicing defining the keywords of the industry. Personally, when I think about digital advertising i like to picture the smallest molecules of all that is digital media and work my way up to the more advanced concepts that are taking place in the industry. Here is a refresher course at the basics: Learn what is CPM eCPM and rCPM.
What is CPM?: Cost Per 1000 Impressions
What is CPM? CPM (cost per mille simply means cost per ad 1000 impressions. In the digital advertising ecosystem, CPM is the measurement tool, baseline, a minimum, or however you want to phrase it for buying and selling ad impressions.
Example CPM Calculation
For Example: is an advertiser pays $6.00 for 6,000 impressions, the CPM they are paying is $1.00. For every 1,000 impressions the advertiser credits the publisher $1.00. This is a fixed CPM model which makes it easy to forecast earnings.
eCPM: Effective Cost per 100 Impressions
eCPM is the effective cost per 1000 impressions, or the actual revenue per 1000 impressions earned by a client. There are factors that can lower a publisher eCPM such as lost impressions in a CPM waterfall, low fill rates and discrepancies. It is important for a publisher to understand exactly how much they are earning from an ad network.
Example eCPM Calculation
For Example: if a publisher is using an ad network to monetize and they send 1000 impressions and are compensated $5.50, then that publisher has an eCPM of $5.50. It is important as a publisher to understand exactly how much you earning from a revenue source and what true eCPM they are backing out into. If you send an ad network 10,000 ad impressions but they only track 9,000, then there is a 10% discrepancy. The best way for a publisher to protect themselves from lost revenue is to have a discrepancy clause in the contract that implements a max discrepancy.
rCPM (RPM) Revenue Per 1000 Impressions
The rCPM is a simple calculation of the revenue generated per 1000 impressions and is calculated: Revenue divided by impressions times 1000. This term is commonly used when understanding the profitability of an ad campaign.
Example rCPM Calculation
For Example: If an advertiser is paying a CPM of $5.00 and has an RPM of $4.00, then they are unprofitable and loosing $1.00 for every 1000 impressions. Want to Learn more about Digital Advertising? See: