The advertising world has a reputation for throwing around a lot of numbers. With so many different metrics to track on your site, it can be confusing to know which measurements actually matter when it comes to understanding your monetization strategy. In the end, you need to know how to track the success of your ad revenue and your user experience. Still, that’s easier said than done. That’s why we’re supplying our expertise to help you sift through the smoke and mirrors of ad data, so you can feel confident in taking control of your monetization.
Just to illustrate how messy advertising can be, we’ve created a little video that explains how to get the most from your ads through a simple analogy.
Now that you understand how ad monetization works, you’ll need to decode the metrics. It’s crucial to understand your revenue and ad performance in order to grow it. See how each metric plays a part of the puzzle that is your ad revenue.
RPM = Total revenue/(pageviews/1000)
RPM stands for Revenue Per Thousand Impressions. To calculate RPM, divide your total pageviews by 1,000 then divide your total revenue by that number you got when you divided your page views by 1,000. Not only is this a fairly simple metric to calculate, it’s one that is frequently used. Saldy, most publishers start and end here thinking this will give them all they need to know about their revenue. Although it’s an important metric, that is not the case. Your RPM will show you how much you make for every impression created on your site. This will give you an overall revenue sum for your entire site per 1,000 impressions.
This is a great metric to evaluate if your current ad strategy is delivering your desired results. You can see how much you are making with all of your ads together on one page. From there you can decide if this is a healthy number you want to sustain or something that needs to change. RPM gives you an overview of your sites ad performance. If you want to see which ads are performing better and at what location on your site, you will need to look a little deeper. If you are unsure if your RPM is in a healthy range for the amount of traffic and ads on your site, check out our free site evaluation to compare.
CPM= Single Ad cost/(Single Ad Impressions/1,000)
CPM stands for cost per one thousand impressions. You can calculate your CPM by first dividing the impressions from one ad by 1,000. Then take how much you are being paid for one ad and divide it by the number from dividing your ad impressions by 1,000. Instead of measuring your overall revenue like RPM, CPM measures the cost per ad on your site. This metric shows you how much advertisers are paying for an ad space by showing you the average cost per 1,000 impressions. CPM will show you the cost for your ad space averaging both your highest filled ads, and those that are not bought.
Although CPM is useful for seeing how much you are being paid for your ads, most people confuse it with the following metric.
eCPM = Total earnings/Impressions x 1,000
eCPM is the effective cost per thousand impressions. Get your eCPM by dividing your total earnings by your impressions multiplied by 1,000. At Monumetric we often use eCPM because we want you to make the most with your ad real-estate and this metrics helps us see how. When you look at eCPM you are seeing the cost per thousand impressions that are sold or filled.
Distinguishing the difference between these two metrics can be overwhelming. Here’s a clear example of how to use CPM and eCPM. Let’s say you have 6 ads on your site. An advertiser comes along and bids $2 for 1,000 impressions for one of your ads. The rest of your 4 ads (1,000 impressions each) are sold for .30¢. Their CPM would be .30¢ a piece or $1.2 collectively. Adding all of your ad impression CPMs together would give you $3.2 which equals your total revenue. To get your eCPM you would divide your total revenue of $3.2 by the amount of ads 5 which would give you an eCPM of .64¢. You can see both metrics matter. You want to see how much advertisers are paying for which type of impression. The higher they pay for your inventory the higher your total revenue, and the more you can make. Looking at CPM you are focused on bigger payouts for certain ads. On the other hand, by focusing on boosting a higher eCPM you are getting more overall for all of your impressions which will give you an even higher yield.
If you’re still not sure how to distinguish the difference we’ve brought back the apple analogy as it relates to these metrics.
eCPC= Total spent or Revenue/clicks
ECPC stands for effective cost per click. View your ECPC by dividing your revenue by total clicks. ECPC is important because advertisers want to see how effective their campaigns are, and how much profit they can make per click. You want to see how much clicks on your ads are going for. When you run your own ads on Facebook, for example, you choose how much you are willing to pay for each click. What you end up paying to run that ad is the cost per click timed by each click you received. Advertisers sometimes prefer to pay for clicks rather than impressions for different campaigns.
ADS PER PAGEVIEW
Ads Per Page View= Ad impressions/ Pageviews
This metric seems self-explanatory, but can be more complicated.To calculate ads per page views divide your ad impressions by total pageviews. You have to understand why this calculation is necessary and how the metric can’t be assumed. Let’s say you have 6 ads on your site. You might think this means you will always have 6 ads per page view. We wish this were true. Sadly, not every reader stays on your top ad optimized pages long enough or scroll below the fold to view each ad. If an ad is not seen, advertisers aren’t likely to pay high rates. This actual metric averages about how many ads are being served to your users per page-view. This way you can see how many ads they are engaging with on your site. The more ads they see, the more you are paid.
Bounce rate, how engaging your content is, page load time, and browsing habits can cause lower ads per page view. Landing pages and index pages, for example, rarely have ads, so if a visitor is spending time on these pages and less on pages with ads,your ads per page view may dip. When deciding your ad strategy, this metric is critical to track. You don’t want to overwhelm your readers with ads, but often times your ad strategy could be improved by adding more ads to more of your site. By watching your ads per page view and bounce rate, you can see if your ads are impacting your user experience.
We’ve covered RPM, CPM, eCPM, eCPC and Ads Per Pageview which are just some of the most important metrics to gauge your ad performance. By understanding the metrics behind your site, you can better improve ad performance by following trends in data. Sure at first glance this can seem like a lot of math to do for each reporting period. Don’t stress, at Monumetric we provide our publishers with total access to a comprehensive dashboard of data.
Discover what’s working for your site and what could be improved today. Start tracking these crucial metrics. Access your free site analysis HERE and begin measuring what matters.