CPM and RPM are words related to the online advertisement industry.CPM stands for cost per mile, thanks to revenue per mile.
Key Takeaways
- CPM (Cost per Mille) is the cost advertisers pay for every thousand ad impressions. In comparison, RPM (Revenue per Mille) represents the revenue earned by a publisher for every thousand images of ads served on their website.
- CPM is a metric used by advertisers to measure the cost-effectiveness of an ad campaign, while publishers use RPM to gauge their ad revenue potential.
- CPM and RPM are essential in the digital advertising ecosystem, as they help advertisers and publishers optimize their ad campaigns and monetization strategies.
CPM vs RPM
CPM (Cost per Mille) and RPM (Revenue per Mille) are metrics used to measure the effectiveness of online advertising. CPM refers to the cost an advertiser pays per 1,000 impressions, while RPM refers to the revenue earned per 1,000 impressions. A high CPM indicates a high cost per impression, while a high RPM indicates high revenue per impression. CPM is useful for advertisers to measure the cost-effectiveness of their ad campaigns, while RPM is functional for publishers to measure the monetization potential of their traffic.
When an advertiser wants to run an ad campaign, we will use the CPM campaign in which he will be charged for the number of impressions for his ad.
The metric used to signify the ad campaignโs performance is called CPM.
When a publisher wants to show ads on his site or mobile app, he will be paid for the number of impressions that an ad served on his website or mobile app.
The metric used to signify the amount of money the publisher will earn is known as RPM.
Comparison Table
| Parameter of Comparison | CPM | RPM |
|---|---|---|
| Meaning | CPM means Cost Per Mile, which is how much the advertiser will be charged for showing 1000 impressions for his ad. | RPM means Revenue Per Mile which is how much a publisher will earn on showing 1000 ad impressions on his web property. |
| Calculation | CPM is calculated by dividing the total cost incurred by the advertiser by several impressions and then by 1000. | The ad broker calculates RPM. The publisher has no control over RPM numbers. |
| Use | This metric tests which ad campaign is performing better for the advertiser. | This metric tells the publisher if he is paid more than another ad network/broker. |
| Optimization | When the advertiser starts a CPM campaign, artificial intelligence decides the best target audience for the campaign. | The publisher can try to optimize his RPM by creating multiple ad placements and testing different types of ads like text, links, images, and video ads. |
| Cost | The advertiser is billed per 1000 impressions. | The ad network/broker takes a commission cut and transfers the remaining amount to the publisher. |
What is CPM?
CPM or cost per mile is a cost that an advertiser will pay for running his brand awareness or product awareness campaign.
CPM campaigns are the default campaigns supported by all the ad brokers in the online advertisement industry.
Creating a CPM-based campaign includes the advertiser creating an ad copy for the ad and deciding the daily budget the advertiser is willing to spend on the ad campaign.
The budget is the total amount of money the advertiser wants to spend.
Once the ad campaign has been running for some time, the CPM is calculated by dividing the amount of money on the drive by the number of impressions delivered for the ad and then by 1000.
It is worth mentioning that when a CPM-based campaign is launched, the CPM is high. Still, as artificial intelligence learns more about the target audience, the movement is optimized automatically.
This optimization results in lower CPM rates once the campaign has Run for a few days.
What is RPM?
RPM is known as revenue per mile. This indicates the amount of money a publisher will get after displaying 1000 Impressions on his online property.
RPM is calculated by dividing the amount of money earned by the publisher by the number of ad Impressions he delivered.ย
As with CPM, RPM also gets optimized once it has run for a few days.
The artificial intelligence technology identifies the audienceโs interest in the web property of the publisher and then delivers matching interest-based ads to the audience.
Since the publisher has no control over what kind of ads will be served on his web property, he may deliver other AD campaigns.
The ad broker portal earnings report will show the publisher the RPM.
Main Differences Between CPM and RPM
- CPM is from the advertiserโs perspective, whereas RPM is from the publisherโs perspective.
- CPM is the cost that an advertiser will pay if his ad has been served 1000 Impressions.RPM is the amount of money a publisher will earn once 1000 Impressions have been made on his property.
- The CPM metric compares an advertiserโs performance of two or more ad campaigns.RPM metric compares a publisherโs performance of two or more ad networks.
- Apart from CPM, the other ad campaigns available to an advertiser include CPC, CPI, andย CPA, with the option to start any campaign he wants. Similarly, for a publisher, the campaigns available are CPC, CPI, and CPA, with no option to choose from them.
- The advertiser can change his ad campaign based on the marketing objective. The publisher does not have much control over the ad campaign that will be run on his property. The best a publisher can do is to optimize the placement of ads so that more people can see them and click on them.
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Sandeep Bhandari holds a Bachelor of Engineering in Computers from Thapar University (2006). He has 20 years of experience in the technology field. He has a keen interest in various technical fields, including database systems, computer networks, and programming. You can read more about him on his bio page.
