Get Your Ducks in a Row: eCPM Mobile Advertising Model Explained

You have certainly heard this term even if you are new to the mobile marketing industry as well as app promotion and advertising. Different people are still trying to find the exact answer to the question “what is eCPM?” and how it works. Moreover, experienced advertisers use many other abbreviations confusing novice promoters with some other terms like CPM, CPC and other letters that may seem senseless at first sight. We are here to make things clearer for you and reveal what those letters actually stand for.

Many advertisers and publishers make a common mistake when defining the term. They think that metrics is used to calculate the revenue. Well, it is not. Advertisers to calculate their costs use this kind of metrics. Mislead by this delusion, many players in the market have the wrong vision of eCPM formula as well. Moreover, some novice advertisers think that the term is the same as CPI, CPA, CPO and more. Those are mainly the advertising models that are divided in accordance with their specialization that may range from cost per click to cost per action.

eCPM vs CPM?

Both terms look almost the same, don’t they? However, there is a huge difference between them. While the second one can be translated as the cost per mile, where a mile stands for 1,000 of impressions, the first one stands for “effective cost per mile”. That letter “e” makes the crucial difference between two models.

The first one lets advertisers make decisions that are more accurate as well as evaluate their investments compared with the real return. They have a chance to choose the most appropriate ads that will suit their campaigns and ad models. The first one comes as an efficient comparative metrics while the second one reflects the invoice price. It may sound a bit complicated. This example will help you to understand the key difference between eCPM and CPM.

Imagine that you have a company that buys 1,000,000 impressions from a virtual network. You spend $3,000,000, which means that your CPM is $3. The problem is that the metrics is hardly helpful for you as the director of marketing, as you are not able to estimate and predict real returns considering current investments.

On the other hand, eCPM will reveal the following figures:

  • 200,000 extra impressions brought to you as bonus by the virtual network;
  • You got 1.2 million views for your invested 3 million;
  • The real cost per mile is $2.50.

Judging from the example it becomes obvious that this one is more efficient as for the advertisers. This is the very tool you may need to estimate your ad parameters, inventory and networks no matter if you use your own or opt for third parties. This is the tool letting you come up with the most accurate and precise evaluation of the efficiency of your campaign. Now you can make better decisions that are more informed and take the fullest from your advertising strategy and generate maximum revenue.

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