Effective cost per thousand impressions (technically, “effective cost per mille”).
eCPM helps compare media with different pricing methods by converting everything to a common metric. This can be helpful when you have a mix of ad buys denominated in cost per impression, cost per click, cost per lead, cost per action, fixed-price sponsorship, or other pricing methods. Sometimes, eCPM is used to refer to revenue per thousand impressions on the publisher’s side.
As long as you have information for cost and impressions, you can calculate eCPM.
eCPM = —————– * 1,000
eCPM = total cost / (impressions / 1,000)
eCPM = (CPC * clicks) / (impressions / 1,000)
eCPM = (CPL * leads) / (impressions / 1,000)
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For example, an ad campaign has a cost per click (CPC) of $1.50, and 2,000 clicks over 100,000 impressions.
step 1 = ($1.5 * 2,000) / (100,000 / 1,000)
step 2 = $3,000 / 100
step 3 = $30 eCPM
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This can also work for campaigns you haven’t run yet, using assumptions about the performance variables, and putting the variable cost information in terms of 1,000 impressions.
For example, an ad campaign with an estimated CPC of $3.00 and an estimated CTR of 1%.
step 1 = $3.00 * 1% * 1,000
step 2 = 3 * (.01 * 1,000)
step 2 = 3 dollars per click * 10 clicks per thousand = $30 eCPM
see also: Digital Marketing Tools