45. What is eCPM? How is eCPM calculated?
CPM Stands for “Cost per Mille” with Mille referring to ‘1000’ in the latin language. eCPM refers to a statistical output derived from the CPM and is the short form of ‘effective cost per mille’.
The formula to calculate eCPM involves data points like ad impressions clicks and a CPC rate for a given campaign. It’s a simple calculus once practiced.
How to Calculate eCPM for a CPM base Advertising Campaign
For Digital Marketing Campaigns which are executed on a CPC rate basis, the eCPM can be calculated as follows:
- Note down the number of ad impressions for the period of the campaign
- Note down the clicks received on the ads over the same period of time
- Now note down the CPC rate for the internet marketing campaign executed for the same period
Now using the following formula eCPM can be calculated:
- Multiply clicks x CPC (Cost Per Click) = Total Ad Spend
- Divide impressions by 1,000 = total mille’s consumed.
- Now divide total Ad Spend / by total Mille’s (as per point 2 above)
Let’s use the following fictional numbers for an example:
- A campaign with a CPC pricing was displayed 5 million times in a period of 7 days
- During the course of the campaign 1,000 clicks were delivered
- The CPC rate for the campaign was set to INR 20
We can now calculate the eCPM of this campaign with a CPC rate:
- Total revenue was 1,000 clicks x 20 = Rs.20000
- 5 million impressions = 5,000 mille units of 1,000 impressions
- The eCPM is calculated as 20000 divided by 5,000 = INR 4
As you can see it is simple to calculate the eCPM value of a CPC campaign for any given time frame.
Calculating eCPM for a CPA (cost per acquisition) campaign
Many a times campaigns are run on a CPA basis where the objective can be leads, sales downloads etc in such cases the eCPM formula is :
- No. of ad impressions over the campaign period
- No. of sales, leads, downloads (whatever was agreed) over the campaign period
- The CPA rate for the campaign
Once you know this input data, the formula is:
- Total Ad spend = conversions x CPA rate
- Total CPM Mille Units – No. impressions divided by 1,000
- eCPM value = Total Revenue / Total CPM mille units
- A CPA (Conversion – Sale) costing campaign delivered 6 million times in 4 days
- During the same period 4000 sales took place
- The CPA rate for the campaign was INR 120 per sale
eCPM this campaign :
- Total amount = 4000 sales x 120 = INR 480000
- CPM Units – 6000000 / 1,000 impressions = 6000
- Therefore eCPM will be – 480000 / 6,000 = INR80
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