These terms have been thrown around quite a bit in the advertising world, but it can sometimes be quite confusing to understand. If you own a website/blog you might have come across such abbreviations and it may not be that easy to grasp how calculate eCPM CPC rCPM and CTR. In this article we will tell you about the difference between them and why they are important to understand.
Depending on the advertising partner you could be earning revenue based on either eCPM or CPC as these are the most common methods for advertisers to buy website banner inventory (space), for example these alternative products. For example Adsense pays per clicks (CPC) and header bidding is based on revenue per 1000 impressions (eCPM).
We have made two tables that are stripped down to a bare minimum so it is easier to understand and can be used by anyone. The reason is that a lot of advertising companies complicate things and we want to make it as simple as possible.
Understanding these Abbreviations
|eCPM||Revenue paid per 1000 ad impressions displayed on the website.|
|CPC||Revenue paid per each ad click.|
|rCPM||Revenue paid per 1000 ad requests (not impressions).|
|CTR||How many users % clicked on the ad banner.|
Formulas to Calculate CPC, CTR, eCPM and rCPM
|eCPM||Filled Impressions / (Revenue x 1000)|
|CPC||Revenue / Measured Clicks|
|rCPM||Total Ad Requests / (Revenue x 1000)|
|CTR||(Measured Clicks / Filled Impressions) x 1000|
These Are Important to Understand
Whether you own a small blog or a large website these terms will always appear when using any monetization product. As mentioned before eCPM and CPC are the most popular metrics used by advertisers to buy ad inventory.
Header Bidding for example is based on eCPM, but CPC and CTR are indicators that are important to analyse as well. If a banner has higher click through % (CTR) then advertisers will be willing to pay more for the impression.
While eCPM based solutions in most cases are the best way to earn revenue it can be combined with for example Adsense links where CTR could be high in certain positions. For example if the links are in the middle of article and are relevant they could earn more than just a regular banner. While for top/bottom and side positions this would not be such a good option because of lower CTR. A smart combination of both can bring high return in terms of revenue.
The best way to find the best solution for your website is just to test as much as possible and see which combo pays the best. Each website is different and therefore require experimentation to earn the most revenue.