Metrics are key to understanding and optimizing revenue potential, but with all the different acronyms one can research, it’s hard to know which metrics matter. Terms like eCPM (Effective Cost Per Mile), RPM (Revenue Per Mile), and RPS (Revenue Per Session) are fundamental indicators of performance, yet each measures a different aspect of revenue generation for publishers. Here, we’ll break down each of these metrics, explain their use cases, and share our take on what matters most to your publishing business.
1. eCPM: Effective Cost Per Mile
eCPM calculates the estimated revenue a publisher earns for every 1,000 ad impressions displayed in an app, regardless of the pricing model used (CPM, CPC, or CPA). The eCPM formula allows publishers to assess the earning value of their ad real estate. A high eCPM indicates that the ads served in the app are performing well and converting users – meaning that the publisher is earning more revenue. Ad networks will also use eCPM data to determine which campaigns to scale over others.
How is eCPM calculated?
To find eCPM, divide the total ad revenue by the number of impressions, then multiply by 1,000:
eCPM = (Total Revenue / Total Impressions) x 1,000
For example, if a publisher generates $500 from 100,000 impressions, the eCPM would be $5. This metric is crucial for publishers because it provides a baseline to compare the performance of different ad campaigns or networks.
Best for:
Publishers with ad networks, direct-sold ads, or programmatic campaigns can use eCPM to measure the revenue efficiency of their ad placements across different pricing models. It helps answer the question, “How much am I effectively earning per thousand views?”
2. RPM: Revenue Per Mile
RPM stands for Revenue Per Mile, a metric that focuses specifically on publisher earnings for every 1,000 page views. RPM goes beyond just ad impressions and includes total earnings from all revenue sources, such as banner ads, affiliate links, and sponsored content on the page. RPM is also heavily used by video-based publishers.
How is RPM calculated?
RPM is calculated by dividing total revenue by the number of page views (not individual ad impressions), then multiplying by 1,000:
RPM = (Total Revenue / Number of Page Views) x 1,000
For example, if a publisher earns $200 from 40,000 page views, the RPM is $5. This metric is valuable for publishers because it evaluates the overall revenue performance of a web page rather than isolated ad placements. This is especially important for publishers in considering ad placement, determining if their ad placement is properly complimenting content and consumer intake.
Best for:
RPM is ideal for publishers aiming to measure and optimize total page revenue. It provides insight into which content or pages generate the most income per 1,000 views, allowing publishers to make strategic decisions about content, ad density, and monetization.
3. RPS: Revenue Per Session
What is RPS?
RPS, or Revenue Per Session, measures the average revenue generated per user session on a website or app. Unlike eCPM and RPM, which are based on impressions or page views, RPS evaluates revenue performance based on the number of individual user sessions, regardless of how many pages or ads are viewed.
How is RPS calculated?
To calculate RPS, divide total revenue by the number of user sessions: RPS = Total Revenue / Total Sessions
For instance, if a publisher earns $300 from 3,000 sessions, the RPS is $0.10. RPS is particularly useful for publishers looking to understand the value of each user session and optimize site engagement.
Best for:
RPS is effective for publishers aiming to boost the value of each visit or session, making it a very valuable metric for publishers who want to drive consumer evangelism. It offers insights into user engagement and the revenue impact of session length or repeat visits.
Key Differences and Use Cases
How to Use These Metrics in Your Advertising Strategy
Each metric provides unique insights into different aspects of ad revenue and user behavior. Here’s how publishers can leverage them strategically:
- Use eCPM to evaluate ad efficiency and compare performance across different ad placements or campaigns.
- Rely on RPM to fully understand revenue generated through advertising and adjust content strategies based on high-RPM topics to increase earnings – or adjust ads to drive better value to the associated content.
- Leverage RPS to focus on consumer engagement and optimize for longer sessions and higher user retention, which directly boosts ad impressions and engagement.
Adnimation’s Take
So, what’s most important? Here’s what Adnimation’s co-founder, Timer Treves, has to say on this topic:
“At the end of the day, I would recommend a combination of RPM and RPS. RPM will help you understand how you got someone to your content. RPS will help you understand how your content and ad structure support the needs of your consumer. When you are building an ad monetization strategy, it is critical that you create a layout and campaign that drives users and builds evangelism. Even if you get users to the site, the wrong type of ad placement may deter them from ever coming back.”
For a comprehensive approach to ad optimization, consider working with ad monetization experts like Adnimation to fine-tune each of these metrics for maximum impact. Reach out to us for a consultation.
