eCPM stands for effective cost-per-mille (cost-per-thousand impressions), it is a term that many Adsense publisher come across routinely in their dashboard. eCPM although an effective metric for publishers to track which property is giving them the most revenue; it is also an important metric that advertisers can track to optimize their advertising campaigns.
A publisher can track eCPM to see which ad unit is giving him/her the most revenue.
How to calculate eCPM
eCPM is calculated by dividing total earnings by total number of impressions in thousands. Following is the formula for eCPM:
Example of using eCPM data
Suppose you are a publisher who is running two ad units on your website, ad unit X and Y. Now ad unit X receives 330 impressions and earns $3 for you, and ad unit Y receives 120 impressions and earns $1.4. To make both these figures comparable, since the impressions received on these ad units are skewed,we calculate the eCPM. Ad unit X has a eCPM of $9.09 and Y has an eCPM of $11.66.
Therefore, we can safely conclude that using ad unit Y, we would be earning more per thousand impressions i.e. $11.66 compared the $9.09 using the ad unit X. This is how the eCPM data become extremely useful and actionable for a publisher. The publisher can then consider using more ad units Y over ad units X in order to maximize his/her earnings.
In corollary, eCPM is used by advertisers to measure there efficiency of display advertisements. It allows an advertiser to check the feasibility of running a display campaign depending on which is converting better. The campaign that provides the least eCPM and most conversions is obviously the most preferable choice for the advertiser.
You might also be interested to see other metrics used for online advertising.