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:

  1. Note down the number of ad impressions for the period of the campaign
  2. Note down the clicks received on the ads over the same period of time
  3. 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:

  1. Multiply clicks x CPC (Cost Per Click) = Total Ad Spend
  2. Divide impressions by 1,000 = total mille’s consumed.
  3. Now divide total Ad Spend / by total Mille’s (as per point 2 above)

Let’s use the following fictional numbers for an example:

  1. A campaign with a CPC pricing was displayed 5 million times in a period of 7 days
  2. During the course of the campaign 1,000 clicks were delivered
  3. The CPC rate for the campaign was set to INR 20

We can now calculate the eCPM of this campaign with a CPC rate:

  1. Total revenue was 1,000 clicks x 20 = Rs.20000
  2. 5 million impressions = 5,000 mille units of 1,000 impressions
  3. 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 :

  1. No. of ad impressions over the campaign period
  2. No. of sales, leads, downloads (whatever was agreed) over the campaign period
  3. The CPA rate for the campaign

Once you know this input data, the formula is:

  1. Total Ad spend = conversions x CPA rate
  2. Total CPM Mille Units – No. impressions divided by 1,000
  3. eCPM value = Total Revenue / Total CPM mille units

For e.g.:

  1. A CPA (Conversion – Sale) costing campaign delivered 6 million times in 4 days
  2. During the same period 4000 sales took place
  3. The CPA rate for the campaign was INR 120 per sale

eCPM this campaign :

  1. Total amount = 4000 sales x 120 = INR 480000
  2. CPM Units – 6000000 / 1,000 impressions = 6000
  3. Therefore eCPM will be – 480000 / 6,000 = INR80

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