eCPM(Effective Cost per Thousand Impressions)- what exactly is that?

eCPM is a bit of industry shorthand that seems here to stay. You've seen it listed in your AdSense reports; it means, "effective cost per thousand impressions."eCPM is calculated by dividing total earnings by total number of impressions in thousands. It is a great performance measure for your various ad units, so when experimenting, you can use eCPM to compare your results.eCPM and CTR (Click Through Rate) is also probably closely watched by AdSense.

On the other hand, it is used to gauge the effectiveness of your ads. If you have optimised your ads properly, have good content and have used keywords effectively which attract high paying ads, you may be high earnings for clicks even though the no of clicks are low, and that will give you a high eCPM. On the other hand, if you have got low paying ads, you may be getting low earnings or even public service ads for which no earnings are given even if you are getting a high no. of impressions, then you will have a low or even zero eCPM.The eCPM is very important for pagerankings.eCPM and CTR (Click Through Rate) is also probably closely watched by AdSense.

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Details :

eCPM can be a useful statistic to track ad performance.For example, let's imagine we have two custom channels named 'Blue Skyscrapers' and 'Red Rectangles', respectively, which reflect the types of ad formats we're testing on our site. During our test, the 'Blue Skyscrapers' channel receives 370 page impressions and $1.48 in total earnings. The 'Red Rectangles' channel receives 187 page impressions and $0.97 in earnings over the same period. To make these figures more comparable we calculate eCPM -- i.e., the estimated earnings for every 1,000 impressions received. We find that eCPM for blue skyscrapers is $4.00 while the eCPM for red rectangles is $5.18.

This means if we received 1,000 impressions of blue skyscrapers, we would earn roughly $4.00. But for 1,000 impressions of red rectangles, we would earn about $5.18. Therefore, assuming that our sample size is large enough, it is to our advantage to switch to red rectangles throughout our site because they generate more revenue per impression.So watch over with your eCPM.

It can be easily calculated.

eCPM = earnings devided by number of impressions multiply by 1000.

Important Topics:

If you are getting very high eCPM, but a very low CTR, your earnings may have been driven up by a lot of invalid clicks from just a few impressions. This may cause AdSense to examine your account closely.

However, a high eCPM with a low CTR may also mean that your site is getting a lot of high paying ads because you have keywords which attract high paying ads, or have optimized the color and the positioning of your ads. So whether Google really pay attention to your eCPM is only guesswork, but for you, it is a good indication of the effectiveness of your ads in your site.

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Excel to find out eCPM :

To make the meaning of eCPM clearer some hypothetica examples are given below. The eCPM was calculated by using the formula eCPM = earnings divided by number of impressions multiply by 1000 (in the C2 cell, typing the formula C2=A2/B2*1000) with MS Excel:Google AdSense eCPM

The figures for eCPM in the last column above was calculated by Excel using the formula =a2/b2*1000 for the second row, and similar calculations were done for the earnigns in the following rows, except that they were given in 2-digit figures.

Another hypothetical example:

Calculation of earnings using figures given for eCPM and Page Impressions

The earnings, in an actual reports may shows $0.00, leading one to think that nothing were earned for the impressions. The figures for the earnings in the above hypothetical example above were calculated using the formula earnings=eCPMxPageImpressions/1000 in the second row. Note that if the figures rounded up to 2 digits will end up as $0.00. That however doesn't mean that you didn't earn anything even though the number of clicks is zero, but you earn an amount too small to show in the Earnings report as it was rounded up to 2 digits. You actually earned something from impressions generated which are accumulated and paid to you.