Unlike today, at the beginning of the Internet, the presence of advertising was very small; very few spaces had been advertised on their websites. The usual thing was to place banners that, as they had not yet saturated the web, their effectiveness was good. The price of the banners was established by CPM(Cost Per Thousand Impressions), and was paid based on the visits that the web had. But the popularity of the Internet and banners grew, saturating the advertising system that had to evolve. The banners ceased to be as effective as at the beginning due to their mass use, and new advertising systems began to be established, which introduced new advertising concepts such as CPC (Cost Per Click), CPA (Cost Per Acquisition), CPL (Cost Per Lead), CPV (Cost Per Sale) and eCPM, which we will talk about today.
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What is eCPM
The eCPM or effective cost per effective thousand is a metric that tells us the cost of 1,000 impressions for an advertising campaign. It is a metric that helps us to know the cost of achieving reach for our advertising campaigns. This term is usually confused with CPM, but it is a different concept as we will explain in this article.
How eCPM is calculated
The eCPM is calculated through the CTR or percentage of clicks and the cost per click:
When your campaign is not by CPM and is, for example, by CPC, the eCPM is the effective method to know the cost of 1000 impressions in your campaign.
What is the difference between CPM and eCPM?
The main difference between CPM and eCPM is that CPM is an advertising payment system for which a fixed amount is paid for getting 1,000 impressions, while eCPM is a metric to measure the cost of 1,000 impressions when the payment system is not based on these, but on clicks, acquisitions, leads, etc.
It is common for there to be confusion between both terms, because they are very similar and some advertising platforms have contributed to this confusion, simplifying and using the concept of CPM as a metric and as an advertising payment system without distinction.
The concept of eCPM is very common in those advertising systems in which, despite being aimed at performance, the reach generated by the ads is still important. It is, therefore, a very common concept when working with segmented audiences, as can happen in social ads or RTB.
Visual example
We have made the following example so that you can check in a more graphic way the differences between the CPM and the eCPM.
As you can see, the image shows the metrics of two different campaigns: one based on CPM and the other based on CPC.
In the first campaign, whose payment method was the CPM, a price of €3 per thousand impressions has been set and there is a budget of €10,000, for which we have achieved 3.33M impressions.
In the second campaign, whose payment method was the CPC, a price of €1.20 per click was set and the CTR was 0.6%, therefore the eCPM, or the cost of 1,000 views in this campaign. the campaign is €7.20.
As the eCPM is linked to the CTR and the CPC, the higher these values are, the higher the value of the eCPM will also be.