eCPM: an important metric but hard to predict!

As the CEO of AdBuddiz, I have the immense pleasure to discuss with many talented developers all over the world. I also enjoy the chance to see the impact of various ad monetization strategies on their revenues. I thought it would be interesting for me to share some of the lessons I learned.

My first series of posts are going to tackle issues related to a metric that is key in this industry: eCPM.

eCPM is an important metric…

CPM stands for Cost Per Mille. It is basically your revenues for 1000 impressions.
You probably also came across a slightly different acronym, “eCPM”.
eCPM (which stands for effective CPM) is the average CPM for all your traffic volume. For instance, if you generate $1000 with 100 000 impressions, your eCPM is $10. The eCPM is a nice way to evaluate the performance of the ads in your app(s).

As a result, when choosing an ad network, many developers want to know in advance what their eCPM will be. Problem is: it is impossible to predict.

Most of the ad networks in our industry (including AdBuddiz) work on a CPI model. Indeed, it’s the most profitable model for both the advertisers and publishers. CPI (Cost Per Install) means that our publishers make money each time they generate installs for our advertisers.

Our publishers’ CPM will depend on 2 factors :
– how many installs they generate for 1000 impressions
– how much the advertisers are willing to pay for each install

Problem is : these 2 parameters can fluctuate greatly. Why is that ?

Imagine a developer who spams his users by displaying one ad every 2 seconds. Imagine another one who displays one ad every 10 minutes. With the same number of impressions, the first one will generate much less installs for the advertisers than the second one because the more frequent the ads the less likely the users will interact with them. When you watch tv, your brain is more receptive to the ads that just follow the ending of your program. If you end up on a tv channel that displays a new ad every 2 seconds, you’ll simply ignore them and change the channel. It’s the same with mobile ads :)

Advertisers propose different install payouts depending on several parameters (country of the install, device of the user, OS versions…).

Thus, it’s impossible for anyone to know the eCPM in advance. As we realize it can be quite frustrating for some developers not to have this info, we decided (at AdBuddiz) to communicate an eCPM based on observations: the calculated eCPM that we are observing among our publishers can be up to $10. We even have some very high quality publishers that sometimes reach more than $15.

Next week I’ll discuss why comparing eCPMs can lead you to compare apples and tomatoes. Stay tuned!