CPM and RPM are two metrics that assist publishers in monitoring their revenue. Although these metrics are different, they are frequently misunderstood by new publishers.
Cost per mille (CPM) indicates the amount an advertiser pays for every 1,000 times their advertisement is shown. On the other hand, revenue per mille (RPM) calculates the earnings generated from every 1,000 ad impressions.
Both CPM and RPM offer publishers valuable insights into their advertising revenue and influence their publishing strategies.
Cost Per Mille (CPM)
“Cost per mille or cost per thousand (CPM) is the amount an advertiser pays per one thousand impressions of their ad on a web page”
CPM is primarily used in display advertising, where the advertiser pays for the ad to appear on a website or app, rather than for a specific action like a click or conversion. Advertisers can also use CPM to set a budget for their campaigns, as it helps them estimate the cost of achieving a certain number of ad impressions.
CPM data allows advertisers to optimize their campaigns by adjusting ad targeting or creative elements to improve performance and lower the cost per impression. Publishers can use CPM to determine the pricing of their ad inventory based on the estimated number of ad impressions their site generates.
There are various types of CPM, such as:
- Effective CPM (eCPM): A publisher-centric metric measuring the ad revenue earned by the publisher per 1,000 impressions.
- Viewable CPM (vCPM): Measures the cost per 1,000 viewable ad impressions.
- Revenue CPM (rCPM): Calculates the revenue generated by a publisher per 1,000 ad requests.
Some advertisers may also use an additional metric known as Target CPM (tCPM), which more accurately describes a bidding strategy specific to video campaigns in Google Ad Manager (GAM), rather than being a distinct type of CPM.
How To Calculate CPM
To calculate CPM, you need two variables: the total cost of the advertising campaign and the total number of ad impressions generated by the campaign.
The formula for calculating CPM is:
CPM = (Total Cost of Campaign / Total Number of Impressions) x 1,000
Revenue Per Mille (RPM)
“Revenue per mille (RPM) is a metric that represents how much money you’ve earned per 1,000 video views”
It encompasses all revenue earned from ads on a website, including display ads, video ads, and other ad types. RPM is a key performance indicator for publishers aiming to maximize their ad revenue.
A related metric is page RPM, which estimates the revenue earned per 1,000 page views. While RPM measures revenue across the entire website, page RPM focuses on the revenue generated from specific pages. This metric is useful for publishers who need to identify the pages that are driving the most or least revenue.
By providing accurate data on estimated ad revenue, RPM helps publishers understand the value of their ad inventory and develop data-driven ad strategies. Publishers can also determine which ad formats and placements generate the most revenue.
How To Calculate RPM
To calculate RPM, you need two variables: the total ad revenue and the total number of page impressions.
The formula for calculating RPM is:
RPM = (Total Revenue / Total Number of Impressions) x 1,000
As a publisher, you should aim to maximize RPM while also monitoring CPM to maintain ad quality and ensure a positive user experience.
By collaborating with ProPS, publishers can optimize both CPM and RPM, ensuring efficient ad management and maximizing revenue across their digital platforms.