eCPM (Effective CPM)
eCPM is what you actually paid for every thousand times your ad was shown. eCPM stands for effective cost per mille. Mille is Latin for thousand, and one showing is called an impression. If you spend $100 and the ad is shown 50,000 times, eCPM is $2. You can still use this number if you paid per click or per view, not per showing.
Theodor Lindfors, Founding Marketer ·
Formula
eCPM = (ad spend / impressions) × 1,000
How to calculate eCPM
Let's take a shoe workshop in Mexico as an example. They make leather shoes and sell them online to Mexico and the United States. The shoe workshop has dozens of styles, colors, and sizes. It runs banner ads (display ads: the rectangles on websites and apps) and also Google search ads it buys per click.
An impression is one time the ad was shown. CPM is cost per mille, cost per thousand impressions. You bid a CPM when you buy that way. Effective cost per mille (eCPM) is the same formula used after the fact, even when you did not buy CPM. Divide spend by impressions, then multiply by 1,000 so the number is 'per thousand' instead of a tiny per-showing price.
On display, the shoe workshop spent $2,400 and the banners showed 800,000 times. 2,400 divided by 800,000 is 0.003. Multiply by 1,000 and you get $3. The shoe workshop paid $3 for every thousand times the banner appeared. That is the shoe workshop's effective cost per mille (eCPM).
Why eCPM matters
Effective cost per mille (eCPM) lets you compare a CPC search campaign (you pay when someone taps) to a CPM display line. CPM is cost per thousand impressions, and an impression is one showing of the ad. Let's take a shoe workshop in Mexico as an example. They make leather shoes and sell them online to Mexico and the United States. The shoe workshop's search ads spent $2,400, got 1,200 clicks, and only 80,000 impressions (search ads show when someone types a query, so they appear less often). 2,400 divided by 80,000 times 1,000 is a $30 effective CPM. More expensive per thousand looks. Those people were searching for leather shoes.
The auction, the fees, and the format all land in one number. Publishers (the sites that sell the space) also use effective cost per mille (eCPM) as yield, what they earned per thousand ads they showed. Same letters, different job. Here it is the shoe workshop's realized price as the buyer.
How to read eCPM
Rising effective cost per mille (eCPM) with stable results can be auction pressure (more advertisers bidding) or tired creative (people have seen the shoe photo too many times). An impression is one showing of the ad. Pair effective CPM with CTR (click-through rate: clicks divided by impressions) and frequency (how often the same person saw it). Viewable CPM is stricter: it only counts impressions that met a viewability standard, meaning enough of the ad was actually on screen. Let's take a shoe workshop in Mexico as an example. They make leather shoes and sell them online to Mexico and the United States. The shoe workshop's $3 display effective CPM and $30 search effective CPM are different products, not a creative contest.
Common eCPM mistakes
These mistakes show up when a shoe workshop in Mexico that sells leather shoes online treats every thousand impressions as the same product.
- Comparing effective cost per mille (eCPM) across countries with very different costs per thousand impressions and calling it creative. An impression is one showing of the ad. The shoe workshop's United States display effective CPM and Mexico display effective CPM are different markets.
- Using reach in the denominator instead of impressions. Reach is how many unique people saw the ad. If 80,000 people saw the shoe workshop's banner 10 times each, impressions are 800,000, not 80,000, and the $2,400 spend still makes a $3 effective CPM.
Lemonado
How Lemonado helps with eCPM
A campaign you buy per click and a campaign you buy per thousand impressions (one impression is one showing of the ad) do not share a column. Effective cost per mille (eCPM) puts them on one scale: what you actually paid per thousand showings. Lemonado already has spend and impressions, so you can ask for effective CPM by campaign without a spreadsheet.