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What is eCPM & How is it Calculated?

What is eCPM?

eCPM stands for “effective cost per mille” (‘mille’ is the Latin word for thousand, so eCPM really means “the effective cost per thousand”). In its full definition, eCPM is the effective cost per thousand ad impressions.

eCPM is used as a tool by app developers when they are comparing ad networks or evaluating the success of an ad-based monetization strategy.

What is the Formula for eCPM?

Calculating eCPM is very simple. The formula for eCPM is: 

Total Earnings/Impressions x 1000
(Total earnings divided by the number of impressions, multiplied by 1000)

Example:

Imagine that you are running two ad types in your app called “Banner  1” and “Banner 2”.

After a month or so of running the ads, you decide that it is time to evaluate the effectiveness of each ad. After reviewing the data, you see that “Banner 1” generated 345 impressions and $1.00 in earnings. “Banner 2” generated 740 impressions with $0.60 in earnings.

Based on these numbers alone, it can be difficult to determine which ad type was the most effective. This is where eCPM comes in.

After evaluating the eCPM formula for each ad type, “Banner 1” has an eCPM of $2.89 and “Banner 2” has an eCPM of $0.81. “Banner 1” wins!

 

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