What is RPM?
RPM stands for rate per mille (mille = 1,000). Confusing, right? Mille is a standard term used in the advertising space to describe 1,0o0 impressions. RPM is a metric used commonly by AdSense and other advertising platforms to convey the paid rate for 1,000 ad impressions (usually on a website or blog).
The number of acronyms used in the advertising and publishing world continues to skyrocket. Although acronyms are an effective way of conveying a lot of information in a few letters, getting comfortable with so many terms can get a little overwhelming.
One of the most common questions about these acronyms is what is RPM — we’ll dive deeper into how this metric is used and who uses it below.
Is RPM an important metric?
Historically and categorically, yes.
RPMs are what Google AdSense uses when reporting ad revenue earnings to publishers. It demonstrates the rate that publishers are paid for ad impressions on their website pages.
Unfortunately, for publishers, RPMs are not the best metric for actually measuring digital revenue.
CPMs — the cost of a single ad position — is what’s used by advertisers to bid on publisher ad space. RPMs are the total amount of all the CPMs on the page.
In actuality, RPMs and CPMS could be going up, but overall website revenue could be going down. See this study.
In fact, this article highlights how publishers are manipulated by seeing higher RPMs when they are actually losing money!
The problem is that publishers earn revenue from sessions, not pages. If a visitor visits multiple pages, the publisher is paid on the cumulative CPMs on all the pages of that visitor’s session. This means that RPMs aren’t telling the full story.
EPMV is a much better metric for understanding the total revenue generated per session.
EPMV allows publishers to get a better idea of how much they are generating per visitor.
This can help account for the fact that too many ads could be disrupting experiences and causing fewer pageviews per visit (and less total ad impressions). To maximize revenue, publishers need to be balancing ads effectively.
Before we discuss other metrics, it may be good to clear up exactly what AdSense and the Google Ad Exchange are… and why they use eCPMs, RPMs, and CPMs in their metrics.
Google AdSense provides publishers with a way of earning money from their website- it matches text and display ads to your site based on your content and visitors.
The Google Ad Exchange, on the other hand, is an online marketplace where many ad networks compete in a real-time bidding auction for ad inventory.
Now that we got that out of the way, here is a list of some of the most important metrics and terms for monitoring the performance of your ads!
Common Publishing Measurements
Impression: An impression is counted for each ad request that returns at least one ad to the site. It is the number of ad units (for content ads) or search queries (for search ads) that showed ads.
Click: When a user clicks on the ad
CTR – Click through rate
Ad Earnings: The amount of money a publisher or site owner is paid for ads on their site.
Success Metrics That Publishers Use
Publishers often want to know what a good eCPM or RPM for their site is. This is complicated and is something we explain here when discussing what a good website RPM actually is.
Here are the most important metrics to understand:
- clicks ÷ impressions = CTR (expressed as a percentage)
Conversion: A user is converted into a customer by buying a product or signing up for a service
CPM – Cost per thousand impressions
- E.g. $4 CPM means the advertiser will pay $4 for the ad to be shown to 1000 viewers.
eCPM – Effective cost per thousand impressions – i.e. the total earnings divided by the total number of thousands of impressions.
- (Total earnings / impressions) x 1000
- eCPM is calculated by dividing total earnings by the total number of impressions in thousands.
- It’s a great performance measure for comparing the results of different ad types.
- Ultimately, it is a very poor success metric for publishers.
CPC – Cost per click
- The amount an advertiser will pay each time a user clicks on the ad.
Bounce rate: the percentage of single-page sessions – when a person leaves your site from the entrance page without interacting with it. Your bounce rate may be high if there are site design or usability issues or if they found the information they need on just one page.
PV/V- Page views per visit – the average number of pages viewed by a visitor in one session.
CPE: Cost per engagement
- CPE is a form of advertising in which the advertiser only pays when the user actively engages with the ad. For example, if an ad expands when users hover over the ad for 2 seconds.
RPM – Revenue per thousand impressions
- (Estimated earnings / Number of page views) x 1000.
- Ultimately, asking “What is RPM”, can be the wrong question for publishers. Ultimately publisher should really be seeking to discover what they are paid for the value of their inventory; which leads us to…
- (Estimated earnings / Number of visitors) x 1000.
- Allows publishers to evaluate earnings based on sessions instead of pages views.
What is a good RPM for your website?
I show exactly how to determine if you have a good or bad RPM or eCPM on your website here.
This isn’t an easy question to answer, but it can be figured out. Furthermore, it may not matter unless you know for sure that your session revenue is headed in the right direction.
Ad Type Definitions
Display Ad: A type of ad that comes in many formats including images, videos, and audio. The message is communicated by the content of the advertisement, rather than relying on text alone.
Native Ad: Ads that are designed to look like content on the site – they are sometimes called sponsored content and are often arranged in rows of tiles containing the ad.
Hopefully, This Helps
This is by no means an exhaustive list of online advertising terms- a great place to learn more is by checking out the AdSense glossary. The Internet Advertising Bureau (IAB.com) is also a good resource.