eCPM is a metric crucial for app developers to understand. It plays a central role in the world of monetization – the process of earning money through your app to reinvest and drive a healthy cycle of growth.

But eCPM is not necessarily the easiest concept to grasp, especially when you have similar but very different metrics like CPM thrown into the works. If you are an app developer that wants to start taking the growth and monetization of your app seriously, you need to come to grips with industry terms like eCPM. This includes everything from what it means to how you calculate it, and even how you could go about improving it. Read on to learn more about eCPM with Pangle.

What is eCPM in advertising?

eCPM is short form for effective cost per mille. It refers to the advertising revenue a publisher (or app developer) can get for 1000 ad impressions. eCPM is, therefore, a predictive metric that app developers can use to evaluate the successfulness of a monetization or user acquisition campaign.

How do you calculate your eCPM?

Calculating your eCPM is straightforward, given you have some basic data about your monetization strategy. Here’s the formula you can use:

eCPM=Total advertising revenue ÷Impressions ×1000

In essence, you can calculate your eCPM by taking the total amount of money earned through advertising, dividing it by the total number of impressions, and multiplying by 1000. This will give you a figure representative of how much money you earn every time 1000 ad impressions are shown through your app. Here’s an example with an app developer that made US$50 from 3201 impressions.

How is eCPM different from CPM?

If you’ve heard of eCPM, then you have probably heard of CPM too. The two metrics are similar in many ways but reveal totally different stories. We’ve talked a bit about the meaning of eCPM, so here’s a quick definition of CPM:

CPM refers to cost per mille and is a pricing model used by ad networks to charge advertisers per thousand impressions. As we can see, while eCPM is an evaluative metric for app developers to use, CPM is simply a price model for ad networks to use.

What does your eCPM mean, and how do you interpret it?

Now that you have your eCPM, you’ll need to do some work interpreting it. In short, what does your eCPM figure mean for your app?

Given the nature of its formula, your eCPM can be influenced by almost countless factors. Your app’s user interface will play an important role, as will the placement of the app within your app and when they show up to users. On the advertisers front, everything from the product/service/app itself together with the quality of the advertisement can impact the campaign’s performance. Ultimately, the ad network will pair together the best combination of advertiser and publisher, incentivizing both parties to play their part in the mutually beneficial optimization process.

To keep it short, a high eCPM would indicate that the ads are performing well, and the app developer is getting paid a good amount accordingly. A low eCPM, on the other hand, would suggest the opposite. In addition to this, if you are an app developer running ads If you have a low eCPM, you may want to investigate optimizing the ads in any way you can (scroll down for specific tips).

How is eCPM used?

In light of this, eCPM is used to help advertisers and app developers understand which type of ad is doing better, and, therefore, making them more money or converting more users. As an app developer, you can make several modifications to your monetization strategies, such as ad placement or update your own user acquisition ad campaigns in ways that improve eCPM.

How do you improve your eCPM?

There are several ways you can improve your eCPM as an app developer. Here’s some of our recommended methods:

  • Experiment with different ad formats

Testing different ad formats – such as playable, interstitial, banner, and others – can help you work out which ones are working best for your specific case. We’ve talked a lot about the different ad formats in our previous blogs, but if there is one key takeaway point, it’s that different formats have different benefits. There is no one-size-fits-all ad format, instead it depends on your goals and unique situation.

  • Perform ad testing

As an app developer running ads for user acquisition, you want your eCPM to be high to ensure you get your ad impressions served first. Ad testing can help you understand which aspects of your campaign are performing better, analyzing it against comparable but different options.

  • Use in-app bidding

In-app bidding is essentially an auction for ad impressions. In many cases, in-app bidding has supplanted the waterfall method and helps app developers improve their eCPM figures. In this model, the ad impression is always supplied to the highest bidder, meaning publishers earn more money, and advertisers are incentivized to optimize their ads as much as possible. Learn more about in-app bidding in our previous blog.