Those who are searching like “what is eCPM?” “What is the difference between CPM and eCPM?” “How to calculate eCPM?” will get a clear answer after reading this post. Those who are running a digital ad campaign for themselves or for an agency will get benefit from this post.

Topics :

What is eCPM?

What is the formula to calculate eCPM?

What is a good eCPM?

What is the difference between CPM vs eCPM?

How to reduce the eCPM for a digital ad campaigns?

Conclusion

What is eCPM?

eCPM stands for effective cost for thousand impressions or effective cost per mille. How much the advertiser spent to deliver a thousand impressions is defined as eCPM cost. For example, the campaign eCPM is $6, which means the advertiser spent $6 to deliver every 1000 impressions, $12 means this advertiser spent $12 to deliver every 1000 impressions.

What is the formula to calculate eCPM?

The following simple formula is used to calculate the eCPM of your ad campaign. 

eCPM = (Total Spend/Total Impressions)*1000

For example, If your campaign has delivered 5000 impressions and the advertiser invoice is $50 means, 

eCPM = (50/5000)*1000

= $10

So, here the eCPM is $10. This means that this advertiser spent $10 for serving 1000 impressions.

What is a good eCPM?

eCPM stands for the amount spent for 1000 impressions. So, low eCPM is good for the advertiser. Normally, advertisers run their ad campaigns to achieve a particular goal. It may be the number of impressions, it may be the number of clicks or it may be the number of leads. So, achieving the results by spending low money is good for the advertiser.

What Is #eCPM? How To Calculate eCPM?

eCPM is the cost that tells how much amount your campaign has spent to buy 1000 impressions. By measuring eCPM you can understand how effectively your campaign buying impressions.

Read Here : https://t.co/upZ6gSfSKe#CPM #eCPM

— Sri Marketing Strategy (@DigiAdvCourse) October 6, 2023

In general, a good eCPM for the advertiser is between $4 to $8. Various factors need to be considered before deciding on a good eCPM. For example, 

> Platform 

> Competition 

> Data Cost

> Ad Format 

> Inventory 

> Bid Optimization

Read this post : Difference between Dynamic Bidding (dCPM) vs Flat Bidding (CPM) methods? How advertisers choose the bidding method?

What is the difference between CPM vs eCPM?

CPM also stands for cost for thousand impressions. But, there is a difference between the CPM and eCPM. CPM shows the cost for thousand impressions, while eCPM shows how much amount actually spent to deliver a thousand impressions. So, eCPM is the final cost for the thousand impressions.

How to reduce the eCPM for a digital ad campaign?

Reducing eCPM is good for the advertiser. So that they run a digital ad campaign with lower ad spend. Read my suggestions and apply them to your ad campaigns. 

Platform

Choosing the right platform is a very most important step for running a digital ad campaign for any brand. Normally, advertisers run their ad campaigns to achieve a particular result. As I said above, it may be the number of impressions, the number of clicks, or the number of leads. 

Advertisers can run their ad campaigns on any platform. They can run their display and video ad campaign on programmatic ad platforms like DV360, Amobee, Pubmatic, etc. Also, they can run their ad campaign on social media platforms like Facebook, Instagram, Tiktok, etc. Each platform is good at something. So, choose the right platform where you can achieve your results by spending low. 

Competition

eCPM completely depends on the competition. Like you, many brands run their ad campaign to acquire the same results. For example, many insurance companies run their ad campaign to target the same audiences to acquire leads. For example, 

A and B advertisers run their ad campaigns for the same goal. Advertiser A runs their ad campaign with a bid price $5 and B runs their ad campaign with a bid price $7. By considering the bid price, B wins in the auction. If advertiser C wants to run their ad campaign for the same targeting then they should run their ad campaign with a bid price above $7. So, competition is very important for the final eCPM. 

Data Cost

If you are running audience targeted ad campaign means you should pay data cost for using the data. Higher data cost leads to higher eCPM. So, you should choose the data provider that has the lower data cost. For example, you want to target the “Insurance” audience, and this category is available on Datalogix with a CPM price $1 and Eyeota with a CPM price $2. Here, you should choose the Insurance category from the Datalogix data provider. So, that only you can get a lower eCPM. But, if your campaign does not perform well by using this category then you have no choice and you should choose the higher data cost category. But, always start with lower data cost data providers. 

Ad Format 

Ad format is also an important factor for the final eCPM. So, before running an ad campaign on any platform, check with them about the CPM cost for each ad format. Choose the right ad format to lower the final eCPM

Inventory 

You can access various inventory sources [ad exchanges] when you run your ad campaign on DSP’s. If you do not have the expected CPM price per the inventory sources at the initial stage, you can run your campaign for a few weeks and get the eCPM per the inventory sources. If you feel that any inventory source has higher eCPM without good results you can exclude them from your campaign. 

Bid Optimization 

Bid optimization is very important for increasing the pacing and performance of an ad campaign. It’s also important to save your money by reducing the eCPM. Initially, we do have any idea about our competitor’s bid information. So, start with a low bid price and increase if it’s needed. Currently, most of the ad exchanges are using the first price auction method. So, if you set a higher bid price then you should pay higher even though your competitor bid very low. Also, use options like “Bid Shading” to save your money [Few DSP’s has this option to save advertiser money]

What Is First Price Auction? First Price Auction Vs Second Price Auction

What Is Bid Shading? How Does Bid Shading Work In Digital Advertising?

Conclusion

Publishers get higher money when eCPM is high, while Advertisers spend more money when eCPM is high. This article is completely written for the advertiser. So, I have shared the suggestion to reduce the eCPM cost. I hope this article helps you to understand all about eCPM. If you have any additional questions or suggestions please share your thoughts in the comment section!

The post What is eCPM? How to Calculate eCPM? How to reduce eCPM? first appeared on Marketing Strategy.

Difference between dCPM vs CPM?

Here are the 5 key differences between dCPM vs CPM.

CPM [Flat Bidding]

CPM stands for “Cost Per Mille”. In Roman numerals, “thousand” is represented by M for mille (as in millenium). So CPM is the cost for 1000 impressions. If an advertiser sets CPM as $5 in their campaign, it means that they want to buy 1000 impressions at the rate of $5. So, we called the CPM bidding method as “Flat Bidding” method.

So the demand side platform bids every impression at the rate of $0.005 ($5/1000). This price will not be changed in the CPM model. So when this campaign reaches its overall budget of $10,000, this campaign will be delivered 5 lakh impressions. The effective CPM of this model campaign should be the same as the actual CPM.

dCPM [Dynamic Bidding]

dCPM stands for Dynamic Cost Per Mille. dCPM is a dynamic cost for a thousand impressions. In CPM model advertisers only bid at the rate of $5/1000=$0.005. But in the dynamic model this amount increases or decreases for every bid [Why – explained below]. So we called the dCPM bidding method as “Automated Bidding” method. If you are choosing dCPM bidding model, you should place the average CPM price and the goal. To reach that goal platform increases and decreases the bidding price for every single bid. But note that the average cost per thousand impressions will not be higher than $5. 

Which bidding model advertiser should choose, dCPM vs CPM?

Every advertiser has different goals for their digital marketing campaign. For example,

(A) Toyota car company is running a campaign to create brand awareness for their new car. So they want to show their advertisements to 5 lakh people at the price of $4000.
(B) GRT jewel company is running a campaign to increase the business. So they want people to get into their website and see the new models and offers.
(C) Hotel Taj is running a campaign to increase online room bookings.

The goal for Toyota company is to create brand awareness by displaying ads to 5Lakh people. because they just want to show their advertisement to 5 lakh people. So campaign planners divide the overall budget into 5lakh impressions and keep that amount as CPM price. CPM = Budget/Impressions * 1000 = 4000/500000 * 1000 = $8. In this situation, the campaign manager runs an advertising campaign with a CPM price $8. So that they can meet the goal within the budget.
 
The goal for GRT Jewel company is to increase the website visitors. So, they want to show their ads to whoever clicks it and visits their landing page. That means the goal is CPC (CTR). In this situation, the campaign manager can choose the bidding model either CPM or dCPM. But note that if you choose the CPM bidding model then the platform doesn’t know your exact goal. So, it delivers the ads to the maximum number of people. Sometimes you may reach the goal (good CPC) or you may not.

If you want to instruct the platform to reach your goal then you must choose dCPM bidding model. Once you choose this bidding model platform shows an option to declare the desired goal. You can choose either CTR or CPC for this campaign.

The same explanation applies to the goal of Hotel Taj. But, for this goal the campaign manager should use dCPM as bidding model and set the goal as CPA and enter the CPA amount. For example, if they kept the CPA goal as $50 then the platform optimizes itself to get one action per $50. So, if you run a campaign with a budget $4000 then the platform tries to get 80 actions in total.

In which situation do we need to choose dCPM as the bidding model?

As i said above, you can choose CPM as the bidding model to achieve goals B and C but sometimes you may not. Because the platform doesn’t know the exact goal of your campaign.

Multiple advertisers from the same DSP or different DSP participated in Real Time Bidding auction to win the ad inventory. Let’s consider your campaign bidding model is “CPM” and your CPM price is $2. Your competitor’s price is $2.2. In this situation, you can’t win the ad inventory because your competitor quotes for a higher bid price. What do you think if you lose a good customer just by $0.2? Feel bad, is that correct?

In the same situation, if you chose the dCPM as the bidding model then the platform can alter the bidding price just above the competitor’s bidding price by its learning and winning the ad inventory. When you choose the dCPM bidding model you must give the Average bid price and the desired goal. If the platform thinks that the incoming bid comes from a user who meets the goal then it increases the bid price and tries to win the auction. Note that, at end of the time the campaign’s eCPM will be equal to the Avg dCPM price.

Conclusion

By reading this article, you must be aware the differences between dCPM vs CPM bidding models. Also, you learned when you should which pricing model. This will help you when you setup ad campaigns.

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The post dCPM vs CPM? 5 Key Differences Explained first appeared on Marketing Strategy.