eCPM is one of the most important metrics used by publishers to track, optimize & evaluate their advertising inventory. Through the process of evaluating the performance of each ad network and ad unit, publishers use different KPIs and metrics. In this article, we will define the eCPM formula, how it differs in market research monetization.
eCPM (effective Cost per Mile) is a widely used term in the mobile advertising industry, however, it can be quite confusing for newcomers in the market who are looking to monetize their apps with in-app advertising.
The general formula used in the industry both from advertisers, publishers, and ad networks is the following one:
eCPM = (Total earnings from ads / Total Impressions) x 1,000
For calculating the eCPM, we divide the total advertising earnings by the total number of impressions that the app has served. Then, multiply this number by 1,000. The final result is the eCPM — the amount of money that the app can make per 1,000 ad impressions.
The eCPM has two perspectives: monetization and user acquisition:
- On the monetization side, eCPM measures the performance of an app with an advertising format. When an app achieves a high eCPM, it means that the ad format is fitting well within the app and converts users. In other words, the more users will be exposed to the advertisement, the higher the revenue will be for the app publisher.
- On the user acquisition side, eCPM measures the ad revenue generated by a specific campaign. Usually, ad networks use the eCPM to rank the campaigns within their ad serving models and deliver their campaigns with the highest eCPM first. Therefore, the eCPM indicates the campaign’s buying power.
The eCPM formula for user acquisition, differs a bit and it’s calculated as below:
eCPM = CPI * IPM
eCPM on the user acquisition side is calculated by multiplying the CPI (how much you’re paying for each install) and IPM (number of installs out of 1,000 the campaign generates) of a campaign.
To better understand the eCPM metric, it’s important that advertisers use the same principle upon calculation. eCPM measures the advertiser’s cost on delivering 1,000 ad impressions. Ηowever, the above formula cannot be applicable to all different types of publishers, because it can differentiate on factors such as monetization format (e.g. rewarded videos or rewarded surveys) & the payment model. For example, certain ad networks pay publishers based on the action (Cost Per Action — CPA). Therefore, eCPM cannot always be accurate.
eCPM helps publishers understand the effectiveness of the available monetization formats and based on this number, they can decide which ad formats are suitable for their apps, optimize their integrations, compare campaign performance, compare ad network performance and the different placements they might have in place. In mediation waterfalls they are also commonly used to define the order that demand sources are prioritized.
The eCPM in market research monetization
Market Research Monetization gains lately more and more traction among app publishers in different app categories (e.g. Trivia Games, Dating & Music), where Rewarded Surveys are incorporated smoothly in their app’s economy.
In Market Research monetization, eCPM is calculated as below:
eCPM = Total earnings from Rewarded Surveys / (Number of people who accept to take a survey) x 1,000
When an app achieves a high eCPM with Rewarded Surveys, a high number of users engage with this format and accept to answer the questionnaire. Impressions of surveys do not say much in this model, since users have to engage with the survey and spend some time to complete. High eCPMs means that surveys that users engage have good conversion rates.
In other words, the more users who successfully complete the survey, the higher the revenue can be for the app publisher.
Talking about eCPM
As mentioned above, eCPM metric is extensively used by publishers in order to measure the effectiveness of different ad formats and ad networks that they use for their monetization. The eCPM can immediately reveal which format or network is better performing in terms of revenue and engagement and also provide a solid base for future revenue predictions on the publisher’s side. On the other hand, advertisers can evaluate the performance of user acquisition campaigns they might run and prioritize accordingly.
In market research monetization, the eCPM can fluctuate from $30 up to $300 in some cases, depending on the demographics of the audience of an app, the availability of survey campaigns in a region, their targeting criteria, and how much every survey pays. Finally, the engagement of the users with Rewarded Surveys plays a big role in the overall performance. The better incentive users have to take a survey (e.g. earn free coins or enjoy the premium version for X days), the more of them will engage with the format and increase the overall eCPM and earnings.
Usually, publishers rely on more than one ad network and more than one ad format to monetize their apps so they can maximize the revenue potential and optimize further the placements which provide them the highest eCPMs for their apps. Proper visibility and understanding of the eCPMs provided by each network (and how they are calculated) can always drive better decisions when integrating each network.