Digital advertising is the trend in today’s business. Reaching out to millions of customers through an advertisement is easily possible through digital media.
Social media platforms are widely used platforms for people to spend their leisure time. The browsing pattern of the user and the most visited site patterns give an idea to the business owners to target the audience with the product that they wanted to market.
Technology has reached the level where a particular user’s browsing pattern can fetch advertisements for his likes. These advertisements feature whenever the user browses the websites or spends time on social media.
All the business owner requires is, the user to view the Advertisement and if he/she likes it can purchase it then and there. This allows the business owner to market his products without even physically involved in the process of sales.
The digital world has a lot of marketing plans for advertisers to publish the advertisement. At this point, two important jargons are to be understood: Publisher and the Advertiser.
Advertiser: A business owner or an organization that would like to feature the advertisements on websites and social media platforms.
Publisher: They are social media platforms or websites or any intermediary to connect with the web platform which can feature the advertisements for the audience’s view and action.
In simpler words, the advertiser is the marketer while the publisher is the market introducer. The important metrics involved in this marketing process are many to ascertain the effectiveness of the marketing campaign.
The two most important metrics of digital advertising are CPM and eCPM. Both the parameters work hand in hand and have their differences in certain aspects as well.
- CPM: Cost Per Mille
- eCPM: Effective Cost Per Mille
CPM vs eCPM
The difference between CPM and eCPM is that CPM is the buying model for publishing an advertisement while eCPM is the metric that reveals the effectiveness of the marketing campaign which gives the revenue generated effectively for every 1000 impressions of the advertisement.
Comparison Table Between CPM and eCPM (in Tabular Form)
|Parameter of Comparison||CPM||eCPM|
|Meaning/Definition||CPM is defined as the Cost paid by the advertiser to the publisher per 1000 advertisement impressions.||eCPM is the effective revenue generated through the campaign per 1000 impressions.|
|Formula for calculation||CPM = (Advertisement Cost/ No. of Impressions) X1000||eCPM = (Total revenue generated/No.of impressions)X1000|
|Purpose||CPM is the buying model. It is the charge to pay to the publisher for publishing the advertisement per 1000 Ad impressions.||eCPM is the metric used to calculate the effectiveness of the campaign.|
|Dependency||CPM entirely depends on publishing costs.||eCPM depends on revenue generated.|
|Hierarchy||CPM is preceded first in a marketing campaign.||eCPM succeeds CPM and it is always calculated at the end of the campaign.|
What is CPM?
CPM abbreviated as Cost Per Mille is the measurement used by the publisher to charge the advertiser for advertising in their platform. It is the charge paid by the publisher for every 1000 impressions of the advertisement featuring in the advertiser’s web platform.
CPM is otherwise called as Cost per Thousand impressions of the advertisement. The publisher shall opt for this model to feature the advertisement so that the audience can view this and take further action.
CPM is calculated as the cost of the advertisement placement on the website for the marketing campaign in terms of 1000 ad impressions.
For example: if the total cost for the advertisement placement is $50
if the Advertiser has opted for 10000 impressions then the CPM is $5. This means to say, the advertiser has to pay $5 per 1000 ad impressions to the publisher.
This is an important metric to make the marketing plan cost-effective. CPM is also used to compare the cost with other platforms for the advertiser to decide upon.
This metric can successfully help the advertisers to analyze the post-campaign reviews.
CPM is an important parameter for the publishers too, in fact, most of the advertising campaigns happen through social media. This is ideally done because social media is the area where the audience presence is high.
CPM does not give any result as such to the advertiser. The audience view is the initial stage for any marketing campaign, once the Ad is impressive to any user and if he/ she clicks, the job of CPM is over.
What is eCPM?
eCPM abbreviated as Effective Cost Per Mille is a critical parameter that reveals the effectiveness of the advertisement campaign. It is the metric that shows the effective revenue generated by the advertisement campaign per 1000 Ad impressions.
CPM is a buying model, whereas eCPM is the vital metric for the advertiser to understand how effective the campaign was. It is calculated with the revenue generated out of the campaign.
For example: If the revenue generated by selling products is $100
If the sale has happened within 40000 Ad impressions. Then, the effective Cost Per Thousand Mille is ($100/40000) X1000 = $2.5 That means to say, eCPM of this campaign after making a revenue of $100 us $2.5
Comparing this with the CPM can give an idea to the publisher whether the campaign was successful or not. The formula for calculating eCPM is (Total Earnings/ No. of Ad impressions) * 1000
eCPM is useful in many aspects for the publishers when a direct response Advertisement campaign is featured. eCPM is also used to make a comparison between site performance and the average revenue earned.
eCPM is an important metric for the advertisers too, it helps them to understand how the campaign impacted the audience. This helps them to take corrective actions in future campaigns too. eCPM is a good comparable metric with the CPM, as the latter is a buying model and the effective revenue generated out of the campaign can attribute to the profitability too.
Main Differences Between CPM and eCPM
- The main difference between CPM and eCPM is, CPM is the metric where the advertiser pays the publisher for every 1000 advertisement impressions while eCPM is the metric that calculates the effectiveness of the advertisement campaign per 1000 Ad impressions.
- These two being important metrics they have their formula too: CPM = (Advertisement Cost/ No. of Impressions) X1000 while, and eCPM = (Total revenue generated/No. of impressions) X1000
- CPM is the buying model and its main purpose is to identify a platform feasible for the advertiser while eCPM’s purpose is to give the effectiveness of the campaign.
- CPM is completely dependent on Publisher cost while eCPM depends on the revenue generated from the campaign.
- CPM is the process to enter the advertising campaign while eCPM is the process to end the campaign.
CPM and eCPM are metrics that help both the publisher and the advertisers. It is suggested by the experts to compare the CPM with different advertisers and choose the one that can help generate maximum revenue. The marketing campaigns are a gamble and this completely depends on the user.
However, it is good to know that metrics like eCPM can help streamline this too. eCPM offers an effective generation of revenue and that is most critical in any campaign. Understanding what is spent and what is earned is common sense. Analyzing the post-campaign numbers shall give a lot of information, that to eCPM offers it point-blank.
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