What is CPM?

CPM stands for cost per mille. Mille is a word which means one thousand and hence CPM essentially means cost per one thousand. The thousand here in digital advertising refers specifically to impressions. So CPM is the cost of using one thousand ad spaces.

Let’s say a developer or owner of an application provides space at \$15 CPM. Then 15 dollars would be the cost that an advertiser would pay for 1000 impressions. The dollar value does not necessarily have to be a multiple of 1000. If an advertiser pays for 2 impressions here then his cost would be 15/1000 multiplied by 2 which is 0.030.

Depending on factors such as the type of digital advertisement (Banner, Native, Reward video etc.), the placement of the ad (main menu, in-game, pause or end of game) and the ability of an application to attract advertisers there may be thousands of campaigns running at different CPM’s for any given application.

Difference between eCPM & CPM?

eCPM is a related term to the term CPM and it stands for effective cost per mille. The formula to calculate the eCPM is Total earnings/Total impressions multiplied by 1000. Let’s use an example to explain this and also provide a scenario of where eCPM calculation would be required. Example 1:

CPM to pay: \$1
Property: Stickman Parkour Platform
Total Budget: \$100
During the period of the campaign 101,000 impressions were served for the advertiser i.e. 1000 impressions were served extra.

So here we calculate what the eCPM is and we use the formula mentioned above-

100/101,000*1000 which is approximately \$.990

An advertiser can also run another model of paying for a campaign. Let’s use a CPC campaign this-

Example 2:

CPC to pay: \$0.3
Property: Stickman Parkour Platform
Impressions served: 1,000,000
Clicks: 3000

So here the revenue made taking the data into consideration is 3000 clicks multiplied by \$.3 which is the cost per click. The value calculated is 900 dollars.

The eCPM here would be 900*1000/1,000,000 which is 900/1,000 or \$.9

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