We compared eCPM and CPM in one of our previous articles. In this article, we will extend the discussion by comparing eCPM with rCPM (also known as RPM). You will learn about the differences between eCPM and rCPM, as well as the importance of fill rate.
If you haven’t read our previous article yet, here is a brief overview of eCPM.
What is eCPM?
eCPM stands for effective cost-per-thousand. It is calculated to demonstrate the ad revenue generated from 1000 ad impressions. eCPM is the average number of multiple CPMs. In simpler terms, eCPM gives you the combined average of all advertiser bids on your ad impressions.
Formula of eCPM
Example of eCPM
What is rCPM?
rCPM or RPM also is known as real cost-per-thousand or revenue CPM. The calculation of rCPM shows how much ad revenue publisher generated from 1000 ad requests. The main difference is that with rCPM publisher’s revenue is based on total ad requests instead of ad impressions. Therefore rCPM takes into account the percentage of the fill rate. rCPM is calculated as if all ad requests were filled and if something wasn’t then it goes into the sum of revenues with the value of 0.
It is vital to understand that ad impressions and ad requests differ completely. An ad request is whenever your website calls for an ad to be displayed on it. It doesn’t mean that the ad will automatically be visible on your site. On the other hand, ad impression, however, happens after the bid for the ad is approved and the ad is displayed on your website.
*If you use Google AdSense, you won’t be able to see how many ad requests you have received. Unless you use an ad server, for example, Google Ad Manager, you will only be able to see ad impressions. Publishers who have their own ad server can see rCPM metrics.
Formula of rCPM
What is Fill Rate?
Fill rate is the percentage of ad impressions your ad received, divided by the total ad requests. For example, if only 250 of 1000 ad requests you sent in total were transformed into ad impressions, your fill rate would be 25% (250 / 1 000 x 100% = 25%).
Fill rate is typically influenced by a lack of demand or set minimum floor price. In such a case publisher should use a passback or account unfilled impressions as lost.
Fill Rate Formula
Example of rCPM with fill rate
Imagine that you have an eCPM of 2€ and your ad has been requested 1000 times in total, but your fill rate is only 25%. This means that your ad was displayed on the website 250 times. You sold 250 ad impressions of 1000 ad requests made. Your calculated rCPM is 0.50€.
(250 / 1 000 x 2€ = 0.50€)
How to know which metric to choose for comparison?
If you want to evaluate ad revenue from a specific monetization partner, always choose the rCPM metric for comparison. If your rCPM metric is higher, your ad revenue becomes higher as well. Since rCPM includes fill rate and ad requests, your calculation will be more precise than if you were to use eCPM. We suggest calculating eCPM if it is the only metric available (Google AdSense users); otherwise, always choose rCPM.
Keep in mind that a high eCPM with low fill rate equates to a lower rCPM and total revenue. Hence, you cannot only rely on the value of your eCPM, because there is a possibility that your fill rate is lower than desirable.
Let’s conclude with an example
Imagine that you have 10M ad impressions, which you sold for the rCPM of 0.50€. This gives you the ad revenue of 5000€.
(10 000 000 / 1000 x 0.50€ = 5 000€)
Now you know that by increasing rCPM, you will gain even more ad revenue. How is this possible? The answer is simple: you have to improve the monetization of those 10M ad impressions. At Setupad, we can help you with this. With the help of Setupad, you can display an ad almost every time a website loads and triggers an ad request.
By using the header bidding solution, Setupad can manage your 10M ad impressions and sell them for the rCPM of 1€. Your total ad revenue doubles giving you 10 000€ instead of 5 000€.
(10 000 000 / 1000 x 1€ = 10 000€)
This example proves that by increasing your rCPM rate, you can boost your ad revenue significantly. Test it out yourself by signing up!