What is the difference between CPM and eCPM in marketing?

eCPM vs CPM

CPM or Cost per Mille (from the Latin Mille = thousand) is a digital advertising metric that provides information about the cost per thousand impressions of an ad. eCPM means effective Cost per Mille and takes into account the total advertising costs. CPM is a media buying metric whereas eCPM has a revenue focus. CPM is the price of a single ad impression. It is extrapolated to thousands so that it is easier to compare them. A 2€ CPM is the same as 0,002€ per impression. CPMs are used as a buying model and for campaign planning. On the other hand, eCPMs are used to measure effectiveness. Thus, different channels, target groups, and formats can be compared with each other. A similar development is the eCPC or effective Cost per Click. The eCPC has the same relationship to the traditional CPC as eCPM has to CPM. However, cost per acquisition (CPA) or cost per lead (CPL) is more commonly used instead of eCPC. CPM pricing models are considered outdated despite continuous development of measurability, such as ad visibility and viewability. Therefore, KPIs for calculating effectiveness are very important.

How to calculate eCPM?

The formula to calculate eCPM is very simple. The revenue generated by the advertising campaign is compared to the impressions per 1000 ad units:

eCPM = (total revenue / impressions) x 1000

eCPM Formula

eCPM calculation example

For example, the revenue generated by a remarketing campaign is 100€ per 1000 ad impressions. The eCPM is then $100 = ($100/1000)*1000

The eCPM can be used to compare campaigns, ad variants, formats, or channels:

A hypothetical Google Ads and Facebook Ads campaign ran simultaneously to the same target audience.

The Google Ads campaign resulted in $300 revenue with 20,000 impressions booked.

The Facebook Ads campaign generated $275 in revenue with 18,000 impressions booked.

Which campaign was more effective?

eCPM Google Ads: ($300/20.000)*1000 = $15

eCPM Facebook Ads: ($275/18.000)*1000 = $15.28

Is a high eCPM good or bad?

The higher the eCPM the more revenue was generated per 1000 impressions. Therefore, a high value is good.

In contrast to a high average CPM – without taking revenues into account – high eCPMs are good for advertisers.

Comparison of CPC and CPM Media Buys

A further application for calculating the effective cost per thousand is to compare different media buys and even types of digital ads. Campaigns that use different CPX pricing models can be compared. For example, a search campaign has no information about the cost per page impression, while a display ad campaign only shows CPMs. How should I compare these two campaigns?

Cost per click can be easily projected to effective cost per mille. In most cases, you get information about the impressions.

effective CPM = (CPC * clicks / impressions) x 1000

Admittedly, most platforms break down many pricing models, but forecasts can be used especially in media planning.

eCPM vs RPM

RPM stands for Revenue per Mille. RPM is a publisher metric that expresses ad revenues per thousand impressions. This allows online publishers to compare different sites, categories, or formats.

Let’s assume that a publisher has sold 10,000 impressions of its ad inventory and has earned a total of $150. Therefore, the publishers’ ad revenue generated an eCPM of $15.

The formula is identical to the eCPM. The revenue in this case is the revenue from the advertising revenue itself.

However, RPMs also continue to develop on the publisher side. Most online publishers do not only earn revenue by placing ads. There are also other revenue streams such as subscriptions or the sale of original content such as eBooks. This is why EPMP is being used more and more. EPMP stands for Earnings per Thousand Pageviews. This metric is the total revenue per effective thousand pageviews rather than just the revenue from ads.

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