What is CPM?
CPM is Cost per mille (CPM) or Cost per thousand (CPT). It is a cost measurement in digital advertising. The CPM is the amount an advertiser pays for one thousand impressions or views for their ad on a webpage or digitally.
Based on the CPM model, you can purchase television, newspaper, out-of-home advertisement, radio, and online advertising. It is a benchmark metric for calculating the relative Cost of advertising campaigns in a given medium.
CPM calculation is done by dividing the Cost of advertising by the number of impressions multiplied by thousands. CPT helps compare the efficiency of various advertising opportunities and evaluate advertising costs.
Moreover, It reflects the ad’s Cost per 1000 estimated views for media without countable views. Along with this conventional approach for estimating advertising costs, results-based models like the percentage of sales or Cost per acquisition are used (CPA).
What is eCPM?
eCPM is an effective cost per mille. eCPM helps to estimate the revenue you receive for every thousand impressions for ads, which are calculated by a formula of Total earnings/impressions x1000.
eCPM is an essential key performance indicator (KPI) in digital advertising because it helps calculate the profitability of ad inventory. The higher metric allows publishers to show ads on several different platforms, which generates higher revenue against their ads. eCPM is the same as RPM (revenue per mille) or per thousand impressions.
Although publishers used RPM initially, and advertisers were using eCPM, later, publishers started utilizing eCPM to align with their client‘s language. Currently, eCPM is the metric most used in the industrial sectors. eCPM helps to achieve your specific settled advertising goals and lets you know about ads performance.
It is also beneficial in determining and predicting future earnings. You can increase your eCPM by optimizing your monetization strategy. You can use the eCPM strategy for various platforms to improve your ads reach.
Difference Between CPM and eCPM
CPM and eCPMare beneficial for digital or online setting up advertisements.
- In CPM, you will pay a cost per thousand impressions, which means you will pay on how many people see your desired ad irrespective of clicks and relevancy. While eCPM helps you calculate revenue and return on investment. eCPM can increase your earnings and be strategically beneficial for advertising.
- CPM is a buying model that shows a publisher a charge cost to pay for publishing ads, while eCPM is a valuable metric in calculating the campaign’s effectiveness.
Comparison Between CPM and eCPM
| Parameters | CPM | eCPM |
| Definition | Cost per millet. It is a cost measurement in digital advertising. The CPM is the amount an advertiser pays for one thousand impressions or views for their ad on a webpage or digitally. | Effective cost per mille. eCPM is a valuable metric to estimate the revenue you receive for every thousand impressions for ads you publish. |
| Purpose | CPM is a buying model showing a publisher a cost to pay for publishing ads. | eCPM is a valuable metric in calculating the campaign’s effectiveness. |
| Formula | CPM=Advertisement cost/no.impressions*1000. | eCPM= (Total revenue generated/no impressions)*1000 |
| Dependency | CPM depends on publishing cost and budget. | eCPM relies on generated revenue. |
| Usefulness | CPM is helpful for advertisers. | eCPM is beneficial for Publishers. |
| Hierarchy | CPM is the first step in digital marketing and advertising to run a campaign. | eCPM is a successor which is always calculated at the end of an advertising campaign to calculate ROI. |
References
- Asdemir, K., Kumar, N. and Jacob, V.S., 2012. Pricing models for online advertising: CPM vs. CPC. Information Systems Research, 23(3-part-1), pp.804-822.
- Nguyen, H.M., 2021. Forecasting the time series of eCPMs in online advertising (Doctoral dissertation, École de technologie supérieure).