Monetization tips: Understanding your eCPM
What is eCPM? And why is it important?
When you show ads in your Android app, you probably want to know how well those ads perform. To generate the most revenue it’s important to determine which ads work the best for your app. What metric can you best use to compare the performance of different ads?
The metric that’s best for comparing different ads is called eCPM. eCPM stands for “effective Cost Per Mille”, in which mille comes from Latin and means 1000. An ad’s eCPM tells you how much revenue you earn when you display the ad a thousand times:
eCPM = Total ad revenue / Total ad impressions * 1000
To maximize the revenue you earn from your app, you should show ads with the highest eCPM values. Most ad networks will show you the eCPM in their dashboard. It’s sometimes also referred to as RPM (Revenue Per Mille).
Why should you use the eCPM instead of the total revenue when comparing ads?
Assume that you show ads from two different ad networks in your app. Yesterday you earned $25 from ad network A and $30 from ad network B. Based on this revenue, you would say that Ad B works better for your app. But is that really true? Suppose that you showed ads from A 6,000 times, and you showed ads from B 10,000 times. Let’s calculate the eCPM for both ads.
Ad network A: $ 25 / 6,000 * 1,000 = $ 4.17
Ad network B: $ 30 / 10,000 * 1,000 = $ 3.00
The eCPM of ad network A is $ 1.17 higher than the eCPM of ad network B. You can use this eCPM to calculate how ad network A would have performed on the impressions served by network B. If the 10,000 impressions that you filled with network B had been filled by network A, you probably would have earned $41.70 from those, instead of the $30 that network B made.
How is eCPM is used in advertising?
eCPM is especially important in ad mediation, which allows your app to show ads from different networks. When your app shows an ad to a user, the mediation platform sends an ad request to the ad network with the highest eCPM first. If that ad network does not have an ad available, then the network with the second highest eCPM can serve an ad. This continues up to the point where an ad network takes the request and serves an ad. Ad mediation ensures that you always show the best ads that are available.
You can get tips on how to improve your eCPM on How to improve the earnings of your AppBrain ad units.