What is eCPM ? Many Questions Arrived

What is eCPM?

eCPM (Effective Cost per Thousand Impressions) is an Advertising industry term that has two different meanings based on whether your an Adsense Publisher or Adwords Advertiser.

For Advertisers, eCPM is the maximum dollar amount they're willing to pay per 1000 Ad impressions.

For Publishers, eCPM is a gauge that is used to compare the performance of different Ad units. The fact that eCPM includes the word "Impressions" can be confusing since the majority of eCPM calculations are based on Adsense CPC (Cost Per Click) ads.

How's it calculated?

eCPM = (Total earnings / Impressions) X 1000

An Example

Let's say you've created two custom channels. One called "leftskyscraper" and the other "topbanner". You go into Adsense reports and select Top Channels. You notice that "leftskyscraper" received 324 Page impressions and $1.34 in earnings while "top banner" received 140 Page impressions and .98 in total earnings.

NOTE: Make sure that you have at least a few weeks of data before comparing channels.

OK, let's compare the two by using the eCPM formula:

Leftskyscraper -> ($1.34 / 324) X 1000 = $4.13 (eCPM)

Topbanner -> (.98 / 140) X 1000 = $7 (eCPM)

What does it all mean?

Well, it shows you that "topbanner" is your higher performing channel and you should start experimenting with the location and style of your "leftskyscraper" channel to see if you can increase it's effective eCPM.

The nice thing about Adsense Reports is that it calculates the eCPM for you.

Is Adsense eCPM deceiving?

A lot of Publishers that use multiple advertising networks would say "Yes".

Why? Adsense uses Page eCPM while the other networks calculate eCPM based on individual ads.

What's the difference? If your comparing the performance of different Ad networks the Adsense eCPM figure will always appear higher since the calculation is based on all the ad units on the page.

Keep this in mind if you decide to experiment with other advertisers.