Difference between CPM, eCPM and RPM
CPM, eCPM and other terms are used when you are media buying ads. Normally on Facebook and Google ads you think of costs in terms of the amount paid per click.
So let’s understand these terms in a deeper manner.
What’s CPM?
CPM is short for cost per mille. Mille means thousands in latin so cpm means cost per thousand impressions.
This is generally the dollar value an advertiser pays when showing his ad one thousand times. Do not confuse it with what the publisher earns when he shows an ad on his site 1000 times.
It’s a simple formula given above:
It’s the cost for a single impression and multiply the same by thousand.
Say you want to advertise somewhere and the person who runs the site says you are going to 100000 impressions for $10000 dollars so divide those and multiply by thousand.
10000/100000*1000
That equals $100 CPM
The CPM also tends to differ based on which stage of the funnel a prospect is in and you tend to pay differing rates as a result.
What Is eCPM?
eCPM is slightly different and is useful when you are doing media buys from a lot of different models.
If the media buying is calculated mostly by CPM and some part of it is also cost per action or CPA and you have different models, eCPM can help.
eCPM is short for effective CPM. With this you convert non cpm buying into cpm so that the rate you are paying is seen of as in CPM.
eCPM is generally higher than CPM.
What is RPM?
The next terminology is RPM which is short Revenue Per mille or revenue per thousand impressions.
RPM is a metric on the publisher-side and not the advertiser side.
This measurement shows how many a website earns every 1000 times an ad gets displayed. In this case the advertiser metric is replaced by the earning metric for the publisher and the equation is same as for CPM.
It’s ad earnings by number of impressions multiplied by 1000.
There are page level RPMs that show the revenue per page. There are also session level RPMs as well.
Conclusion
There’s so much data to analyze and these terms help you figure out what’s important and what’s not.
Understanding the cost in terms of what you stand to get is important in understanding how long it will take to convert a customer in long sales cycles. Generally the top and mid funnels take a long time to complete.
By analyzing the cpm campaigns and their costs you will understand if you can afford paying the high costs or will be better off with a lower priced cpc campaign?