Basics · also called eCPM, effective CPM, RPM
eCPM (effective CPM)
eCPM (effective CPM) is the revenue or cost per thousand impressions calculated after the fact, which lets you compare ads sold on CPM, CPC, CPA or other models.
eCPM translates any pricing model into the same yardstick. A publisher might sell some ads per thousand impressions, some per click and some per install. To see which earns more, it divides total earnings by impressions and multiplies by 1,000: eCPM = (revenue ÷ impressions) × 1,000.
Publishers use eCPM to rank demand sources in ad mediation, a waterfall or header bidding setups, and to track yield over time. Google AdSense calls a very similar metric RPM (revenue per mille), often measured per thousand page views rather than per ad impression, so be careful which denominator is used.
On the buy side, eCPM means what you effectively paid per thousand impressions, whatever the contract said. Confusions to avoid: eCPM for a publisher can be net of fees or gross, and it can be calculated on all ad requests (including unfilled ones) or only on filled impressions; each gives a different number. Always ask for the formula.
Think of it like this
eCPM is like working out the price per kilo when one shop sells apples by the bag and another by the piece: it makes different deals comparable.
An example
An app earns US$900 from a CPC network across 300,000 impressions: eCPM = 900 ÷ 300,000 × 1,000 = US$3.00. A CPM network paying US$2.50 on the same volume earns less, so the CPC network ranks higher.
Related terms
CPM (cost per mille)
CPM (cost per mille) is the price an advertiser pays for one thousand ad impressions; "mille" is Latin for thousand.
CPC (cost per click)
CPC (cost per click) is a pricing model where the advertiser pays only when someone clicks the ad, and also the average amount paid per click.
Fill rate
Fill rate is the percentage of ad requests that are actually filled with an ad, calculated as impressions served divided by ad requests, multiplied by 100.
Ad mediation
Ad mediation is software that lets app developers connect many ad networks and bidders through one SDK and chooses which network fills each ad request to maximise revenue.
Waterfall (daisy-chaining)
A waterfall is an older way of selling ads in which an impression is offered to demand partners one at a time, in fixed priority order, until one fills it.