We explain the difference between CPM and eCPM with table. Digital advertising is the trend in today’s businesses. Reaching millions of customers through an advertisement is easily possible through digital media.
Social media platforms are widely used platforms for people to spend their free time. The user’s browsing pattern and the most visited site patterns give business owners an idea to target the audience with the product they wanted to market.
Technology has reached the level where the browsing pattern of a particular user can get ads of their liking. These ads appear whenever the user browses the websites or spends time on social media.
All the business owner requires is that the user see the ad and if they like it, they can buy it right there. This allows the business owner to market their products without even getting physically involved in the sales process.
The digital world has many marketing plans for advertisers to run the ad. At this point, two important jargons need to be understood: the publisher and the advertiser.
Advertiser – A business or organization owner who would like to display ads on websites and social media platforms.
Publisher: They are social media platforms or websites or any intermediary to connect with the web platform that can present the ads for the audience’s view and action.
In simpler words, the advertiser is the marketer, while the publisher is the market introducer. There are many important metrics involved in this marketing process to determine the effectiveness of the marketing campaign.
The two most important metrics in digital advertising are CPM and eCPM. Both parameters work hand in hand and have their differences also in certain aspects.
CPM: Cost per mile
eCPM: Effective cost per thousand
The main difference between CPM and eCPM that is, CPM is the purchase model to publish an ad, while eCPM is the metric that reveals the effectiveness of the marketing campaign that gives the revenue generated effectively per 1000 ad impressions.
Comparison table between CPM and eCPM (in tabular form)
CPM eCPM comparison parameter
| Meaning / Definition | CPM is defined as the cost paid by the advertiser to the publisher for every 1000 ad impressions. | eCPM is the effective revenue generated through the campaign per 1000 impressions. |
| Calculation formula | CPM = (ad cost / number of impressions) X1000 | eCPM = (Total revenue generated / No. of impressions) X1000 |
| Purpose | CPM is the purchasing model. This is the charge to be paid to the publisher for running the ad per 1000 ad impressions. | eCPM is the metric used to calculate the effectiveness of the campaign. |
| Dependence | CPM is completely dependent on publishing costs. | eCPM depends on the revenue generated. |
| Hierarchy | The CPM is first preceded in a marketing campaign. | ECPM succeeds CPM and is always calculated at the end of the campaign. |
What is CPM?
CPM abbreviated as Cost per Mile is the measure used by the publisher to charge the advertiser for advertising on their platform. It is the charge that the publisher pays for every 1000 impressions of the ad that appears on the advertiser’s web platform.
CPM is also called Cost per thousand ad impressions. The publisher will choose this model to present the ad so that the audience can see it and take further action.
CPM is calculated as the cost of placing the ad on the website for the marketing campaign in terms of 1000 ad impressions.
For example: if the total cost of the ad placement is $ 50
if the advertiser has opted for 10,000 impressions, the CPM is $ 5. This means that the advertiser has to pay $ 5 for every 1,000 ad impressions to the publisher.
This is an important metric for a profitable marketing plan. The CPM is also used to compare the cost with other platforms for the advertiser to decide.
This metric can successfully help advertisers analyze post-campaign reviews.
CPM is also an important parameter for publishers, in fact, most of the advertising campaigns are carried out through social networks. This is ideally done because social media is the area where audience presence is high.
CPM does not provide any results as such to the advertiser. Audience view is the initial stage for any marketing campaign, once the ad is impressive to any user and if they click, the CPM job is done.
What is eCPM?
The eCPM, abbreviated as effective cost per thousand, is a critical parameter that reveals the effectiveness of the advertising campaign. It is the metric that shows the effective revenue generated by the ad campaign for every 1000 ad impressions.
CPM is a purchasing model, while eCPM is the vital metric for the advertiser to understand how effective the campaign was. It is calculated with the income generated by the campaign.
For example: if the income generated by the sale of products is $ 100
If the sale was made within 40,000 ad impressions. So the effective cost per thousand miles is ($ 100/40000) X1000 = $ 2.5
That is, the eCPM of this campaign after obtaining an income of $ 100 us $ 2.5
Comparing this to the CPM can give the editor an idea if the campaign was successful or not.
The formula to calculate the eCPM is (Total revenue / No. of ad impressions) * 1000
The eCPM is useful in many ways for publishers when running a direct response advertising campaign. The eCPM is also used to make a comparison between site performance and average revenue earned.
ECPM is also an important metric for advertisers, as it helps them understand how the campaign impacted the audience. This helps them to take corrective actions also in future campaigns. ECPM is a good metric comparable to CPM, as the latter is a purchasing model and the actual revenue generated by the campaign can also be attributed to profitability.
Main differences between CPM and eCPM
- The main difference between CPM and eCPM that is, CPM is the metric in which the advertiser pays the publisher for every 1000 ad impressions, while eCPM is the metric that calculates the effectiveness of the advertising campaign per 1000 ad impressions.
- Being these two important metrics, they also have their formula: CPM = (advertising cost / number of impressions) X1000 while, and eCPM = (Total revenue generated / No. of impressions) X1000
- The CPM is the purchase model and its main objective is to identify a viable platform for the advertiser, while the objective of the eCPM is to give the effectiveness of the campaign.
- The CPM is completely dependent on the publisher’s cost, while the eCPM is dependent on the revenue generated by the campaign.
- CPM is the process to enter the ad campaign, while eCPM is the process to end the campaign.
Final Thought
CPM and eCPM are metrics that help both the publisher and the advertisers. Experts suggest comparing CPM with different advertisers and choosing the one that can help you generate the most revenue. Marketing campaigns are a gamble and this is entirely up to the user.
However, it is good to know that metrics like eCPM can also help simplify this. eCPM offers effective revenue generation and that is the most critical thing in any campaign. Understanding what is spent and what is earned is common sense. Analyzing the post-campaign numbers will give a lot of information, which is offered point-blank to the eCPM.
