Understanding eCPM, CPM, and Ad Fill Rate: Maximizing Revenue in Online Advertising

Understanding, tracking, and enhancing KPIs are crucial for any eCommerce or SaaS business to grow without overspending on ads. Fortunately, monitoring and refining eCPM, CPM and Ad Fill Rate allow you to create cost-effective scalability. 

Ready to learn more about these metrics? Keep reading to learn about these essential KPIs and best practices for improving them for sustainable growth.

eCPM vs CPM: What’s the Difference

It’s all too common for marketers and business owners to confuse eCPM and CPM. It’s easy to see why, but it’s crucial to understand the difference between them. Effective CPM is an aggregate metric of multiple campaigns, while CPM is a more granular metric focusing on a single camp.

Let’s explore the differences between both metrics to help you understand why both are well worth tracking and optimizing.

What is CPM?

Cost per Mille (CPM) is an advertiser’s cost per 1,000 impressions on a specific ad campaign. An impression is made anytime someone sees your ad, such as while scrolling through social media, and costs are not typically affected by if they click or keep scrolling.

CPM rates can vary significantly by industry and platform. So it’s essential to learn how to calculate CPM. The CPM formula is:

(Cost of Ad Campaign / Number of Impressions) x 1000 = CPM

The result describes the overall or expected cost of the campaign. You’ll pay the advertiser regardless of how many clicks or conversions the campaign receives.

Below, you can see how Varos shows your real-time CPM right alongside your competitors, so you always understand how you compare.

What is eCPM?

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So what is eCPM? This closely related KPI stands for effective Cost Per Mille (CPM) and describes the cost of all CPM campaigns. Most businesses run more than CPM campaigns at a time, and they might have different strategies and allocated budgets. eCPM lets you broadly consider all the various campaigns you might have run to understand costs.

The eCPM calculation formula is:

(Total Ad Costs / Total Ad Impressions) x 1000 = eCPM

The goal of eCPM is to describe the overall results of every CPM campaign you ran for the desired period. You’ll gain a high-level perspective of how much was spent on these campaigns and understand how much was spent across all ads on the platform.

Then, you’ll need to combine eCPM with other metrics to truly understand the ROI for the given period. If you have the right tracking systems set up, you’ll be able to see total conversions and average order value (AOV) for the specific campaigns. 

What is Ad Fill Rate?

Ad Fill Rate is a bit different from eCPM and CPM, but it plays into both. A poor Ad Fill Rate means your ads aren't winning the ad spot, so the campaign needs to be adjusted.

Depending on the platform, you may or may not be shown your Ad Fill Rate. Unfortunately, this isn’t a KPI you can calculate on your own. The formula is:

Impressions / Ad Requests = Fill Rate

You can see how you can’t calculate this metric without knowing the number of Ad Requests. However, if your campaign isn’t receiving impressions after a few days, you may have a bad Ad Fill Rate and need to increase your bid or audience targeting.

Best Practices for Maximizing Revenue in Online Advertising

Are your eCPM rates too high? Are the individual campaigns effectively reaching new users? Is your ad not getting any impressions after a few days?

Varos can help you compare your costs to other companies in your industries, allowing you to understand which of the following best practices will help you maximize your revenue.

Understand the Goal of the Campaign

What are you trying to achieve with the individual campaign? CPM campaigns usually focus on brand awareness and increase reach, not necessarily going directly for sale. 

A CPM campaign can be cheaper than a CPC campaign, which can lead marketers and business owners to opt for CPM to save money. However, you shouldn’t expect a significant amount of revenue from CPM campaigns as compared to CPC.

Know your focus and keep it in mind throughout the process. The goal of CPM and eCPM is to understand your reach, not how many sales are being made. You’ll likely still generate some revenue, but an ideal CPM campaign is followed up by a CPC campaign that goes for the sale.

Optimize Audience Targeting

Audience targeting goes a long way in determining how much your ads will cost and how effectively they’ll reach the right people who want to learn more about your business.

Every paid ad platform has a mechanism for choosing the audience for your CPM ad. You’ll be able to dictate ideal demographics such as income level, gender, geographic location, and interests.

Some platforms, such as Facebook, even assign a relevance score to each campaign which largely considers audience targeting. Facebook wants to provide a great user experience, so if your ads are targeting the right people, you may win the ad spot over another company with a higher bid but less relevant ads.

Choose the Right Bid Strategy and Amount

Bidding too low can result in not having your ads displayed at all or only in low-value locations and off-peak hours. You need to choose the right bid strategy to compete along with a reasonable overall amount for the campaign.

You’ll have a wide range of bidding strategies available to consider, depending on the platform. Common options include:

• Set your maximum bid for winning an impression, and the platform will bid up to that amount
• Set an overall amount per day, and the platform will attempt to maximize impressions and spend right up to that amount
• Various smart bidding strategies that leverage automation and AI to balance specific goals with your budget

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It’s important to remember that deciding whether you’ll run a CPM campaign is only the beginning — you’ll need to consider the right bid strategy and how much to spend.

This is where eCPM comes into play to help you understand costs. You can experiment with cheap, mid-range, and expensive CPM campaigns, then use eCPM to evaluate them collectively.

Craft Ad Creatives Appropriate for CPM Campaigns

CPM and CPC campaigns aren’t just different in how they’re billed, and they have entirely different goals. CPM campaigns are about increasing reach and brand awareness, not going directly for the sale.

You need ad creatives that meet this goal. It’s entirely possible that people seeing your CPM campaigns will have never heard of your business before — you need to make a strong first impression.

What is your brand’s core value proposition? What values does your business prioritize? How do you want potential customers to feel?

Take a step back from the metrics and remember that the creatives themselves are the most important aspect of any ad campaign.

Plan Ahead for the Next Campaign

One CPM campaign isn’t going to be the end point; it’s only one step in the right direction of building your business.

What will you do after your CPM campaign to generate more revenue? What did you do before the campaign? How is your overall brand messaging playing into reaching and converting the right customers?

It’s crucial to realize every individual campaign is one piece of the puzzle, and eCPM helps keep you looking at the big picture. Additionally, most businesses use a blend of CPM and CPC campaigns. Be strategic in how you use these campaign types in relation to your current business objectives.

Gain an Advantage With Varos for Real-Time Peer Benchmarking

eCPM, CPM, and Ad Fill Rate all play a role in your overall advertising costs. Staying on top of these KPIs will help you understand the costs and effectiveness of your paid ad campaigns. Then, you can take corrective action to decrease costs and extend your brand reach.

Varos is a unique platform that gives you the complete picture behind your KPIs by unlocking real-time competitor benchmarking. With Varos, you’ll always know how you compare so you can take corrective action to cut costs and improve results.

Below, you can see how our dashboard displays your results right alongside your peers. Are you falling behind or one of the high performers?

Is it time to gain an advantage over the competition with real-time benchmarking? Reach out to us today to talk to an analytics expert to learn more.

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About the Author

Yarden Shaked

Co-founder & CEO at Varos

LinkedIn