Cost per Mille vs Effective Cost per Mille

Cost per Mille vs Effective Cost per Mille

Most advertisers know that CPM stands for “Cost Per Mille” or cost per 1000 impressions. Advertisers set their desired price per 1000 ads served. The CPM rate is a big help to the advertiser to spread their products to a greater audience for an effective advertising cost. It’s also a metric used by marketers to measure the cost of the campaign, and just how much the publisher will get paid for every 1,000 impressions, and to evaluate the effectiveness of the display ads.

So What is eCPM?

eCPM or “Effective Cost per thousand impressions” is used by both publishers and advertisers to determine the revenue generated from a thousand impressions of an ad campaign and to measure the performance of a publisher’s inventory being sold in various channels.

At Genius Monkey, we’ve been using Effective Cost per Mille (eCPM) along with our attribution methods for years now. This allows us to assign a value to each impression, even though we only charge on a per-click or full-video-view basis. If not tracked correctly, CPM is merely just a cost. You must track the value of an impression and figure out how many of those unclicked impressions made it to a tracked KPI, let alone the website!

Effective CPM can also be effective when forecasting ad-spend and performance across various channels and pricing methods. It’s also effective to help determine the effectiveness of each channel through conversions and cost. An advertiser would typically calculate eCPM for each channel to deduct which offers the best performance at the lowest cost before starting the campaign.

How Does eCPM Help Genius Monkey?

At Genius Monkey, we use eCPM to increase visibility, advertise for relevant audiences, and drive high-performing campaigns. We literally use this data to optimize ad placements on channels, networks and devices and targeted behavioral audiences. Imagine just targeting what you, the advertiser, thinks is your audience, but then realizing you were cutting yourself short on a whole different audience. We see this all the time.

When we show eCPM, we’re basically saying that these are the impressions that affected your campaign’s KPI’s. Now, we could just say, “Hey, we got you a million impressions at a CPM of $XYZ!” But, what does that even mean?

That is Old-World traditional thinking on ads, so now what? We’re saying that these are the effective impressions that were targeted, and as long as you’re using attribution, you can show how many of the impressions helped convert without a click or anything. That’s where the “Effective” comes in.

Effective CPM is taking your regular CPM and, as long as you’re using attribution, you can track that down to what impressions, or what percentage of impressions it gathered. Better yet, we can take it down to the count of which ones actually helped bring people to the site – without ever clicking!

This is How We Do It!

According to Jeremy Hudgens, Genius Monkey’s CRO & Director of Client Solutions, “So, when we say Effective CPM and we show the number, in reality, it’s just CPM. We call it ‘Effective’ because we don’t really charge by that; we’re actually telling them to take a look at what the price WOULD have been if we were charging CPM, but … we don’t! Instead, we’re giving you an Effective CPM and your attribution breakdown showing you what the value of that truly WOULD have been, had you paid. Hence, we use the word ‘Effective’ as in, this was effective CPM,’ and, unlike most advertising platforms, we can show you how and why!”

Because of the attribution process (in which Genius Monkey has grown so competent) and our other digital marketing tools, we can show true effectiveness. We can actually use it to forecast and optimize, where others are just showing clients a simple CPM without being able to break them down to specifics, what the effectiveness of it was, or how it performed.

The old way of showing CPM, and the way our competitors still do, is to run the campaign and find that you end up with a million impressions, so your CPM was $6, let’s say. We e saying that yes, your CPM may have been six dollars, but we broke it down on what was effective or not. That’s why we report on it with an “E.”

Don’t just pay blind CPM costs, know exactly what you are getting from them. Optimize your channels and networks based upon real performance of ads … not just a cost quantity of ads.