CPM vs. eCPM
Buying methods and payment models in digital marketing
CPM isn't only a metric in your reports, it's also a method of buying advertising.
When you are buying ad impressions, you are buying CPM. This means you pay a price for each ad impression. In fact, you pay a fixed price for every 1,000th ad impression, which is the CPM.
Buying CPM = Buying ad impressions
So buying CPM means buying ad impressions, where the CPM is the price for every 1,000th ad impression.
So CPM is actually how you buy advertising, and at the same time the price you pay.
But if your campaign is non-CPM, for example CPC, you could calculate a metric that is somewhat equivalent to the CPM. This is called the eCPM, effective CPM.
The CPM and the eCPM are two sides of the same coin:
CPM is the cost for every 1,000th impression when you are buying ad impressions (CPM buying method).
eCPM is the cost for every 1,000th ad impression, regardless of what buying method are being used (fixed price, CPM, CPC, CPA or CPO).
The main difference between CPM and eCPM is the data you use to calculate it.
- CPM is the price you pay for every 1,000th ad impression when buying CPM (ad impressions)
- eCPM is the effective CPM calculated post-campaign, regardless of buying method
When buying ad impressions (CPM buying method) the CPM and the eCPM would be the same. Of course unless there have been some over- or under delivery by the ad network or the publisher.
The same applies for CPC, CPA and CPO. When buying clicks (CPC buying method) you could calculate eCPM, eCPA or eCPO. See the report below for more information.
In the following sample report we have four different campaigns and four different methods of buying online advertising. In the last three columns we have calculated eCPM, eCPC and eCPA for comparison of the four campaigns.
|Unit prices||Metrics calculated for comparison|
|Campaign||Buying method||Cost||Ad impressions||Clicks||Actions||CTR %||CPM||CPC||CPA||eCPM||eCPC||eCPA|
|Launch Campaign||Sponsorship||25,000||4,231,565||5,678||23||0.13 %||-||-||-||5.91||4.40||1,086.96|
|Spring Offering||CPM||18,000||6,545,159||4,598||28||0.07 %||2.75||-||-||2.75||3.91||642.86|
|Summer Campaign||CPC||10,000||3,245,195||2,000||19||0.06 %||-||5.00||-||3.08||5.00||526.32|
|Affiliate Networks||CPA||35,000||9,519,182||7,456||35||0.08 %||-||-||1,000||3.68||4.69||1,000|
Which one of the campaigns do you consider the most successful one?
I also recommended using the CPM calculator to make sure you get your numbers right.