What’s the Difference Between CPM and eCPM?

CPM and eCPM are often mentioned together and they can be confusing in certain circumstances. In this episode, we will look into the difference between them.

Avatar Cassie Cheng Marketing & Communication Director 2018-08-16

What’s the difference between CPM and eCPM? To an outsider, they might sound pretty similar.

But there’s actually a big difference between the two that you really need to know about.

So let’s take a look at CPM first.

CPM – in case you didn’t know – stands for Cost Per Mille (“mille” is French for “one thousand”). It’s a way of buying advertising that charges you for every thousand impressions on an advert.  

For example, you buy a banner ad in a mobile app at a cost of $5 CPM. While your banner is in the app, the publisher says they’ll generate 10,000 impressions for it.

The cost of that campaign will be $50, because 10 lots of 1000 impressions times by $5 = $50. Simple.

 

But eCPM, which stands for effective cost per mille, is a bit different. If CPM helps you cost a campaign, eCPM is how you calculate whether you got bang for buck.

The formula for working it out is pretty simple.

eCPM equals your Total Ad Spend divided by your total impressions, multiplied by a thousand.

And the best way to see how that formula works is to go back and look at that example from earlier.

 

Imagine again that you agreed to pay a $5 CPM and put down $50 for 10,000 impressions. If that’s what you get, then your eCPM is also $5.

However, let’s try it again and pretend that you struck it lucky. For some reason, your publisher strikes gold and delivers you 20,000 impressions for your fifty bucks.

That means your CPM is $5, but your eCPM is $2.50 because you got double the amount for your money.

It also works the other way too. If the campaign went badly and you only got 5,000 impressions for your $50, then your eCPM would be $10 – pretty disappointing, right?

 

So that’s why eCPM is different from CPM. If CPM is used to work out the cost of a campaign, eCPM is used to determine the value of it.

And in this performance-driven world, you’ll all know it’s about getting value for your spend – not just a good price.

 

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