What is effective cost per mille (eCPM)?

Effective Cost Per Mille, or eCPM is a metric used in online advertising to measure the effectiveness of ad campaigns. It indicates the revenue generated per 1,000 impressions. It differs from CPM in that CPM measures the advertiser's cost for every 1,000 impressions, while eCPM measures the revenue a publisher receives for the same number of impressions.

Publishers use eCPM as a means of enhancing ad placements, keeping an eye on ad monetization performance, and gauging the overall effectiveness of their ad monetization efforts.

It needs to be noted that eCPM only measures impressions, and not the number of times an ad was clicked. This latter metric is called Click-Through Rate or CTR. A conversion happens once the user has transitioned down the funnel of impressions and clicks. The eCPM is thus, only the first point in this conversion funnel, and should be used in conjunction with other metrics to fully evaluate the success of an advertising campaign.

How to Calculate eCPM?

eCPM is calculated by dividing total revenue by total number of impressions. The result is then multiplied by 1,000.

Try our eCPM calculator to better understand this ad pricing model.

eCPM formula

Use this eCPM formula to calculate Effective Cost Per Mille:

eCPM = (Total Earnings / Total Impressions) * 1000

Where:

• Total Earnings is the total revenue generated from the ad campaign.
• Total Impressions is the total number of times the ad was displayed.

eCPM calculation example

For example, let's say a publisher earned $500 from an ad campaign that received 100,000 impressions. To calculate the eCPM, we would use the following formula:

eCPM = ($500 / 100,000) * 1000

eCPM = $5

Therefore, the eCPM for this ad campaign is $5 per 1,000 impressions. This means that the advertiser earned an average of $5 for every 1,000 times the ad was displayed.