While the terms are simple enough, calculating, tracking and optimizing these rates is a whole other ballgame that takes experience and time to master.
Here are the basics to get you started, including our easy-to-follow guide for calculating RPM and CPM. Save it for a rainy day when you forget (because you know you will).
CPM (cost per thousand impressions)
Sure, artisanal this and that is en vogue, but if we’re being honest, the best way to shop is in bulk. CPM is like the Costco of ad buys for your page.
CPM (cost per thousand), according to Investopedia, is the most common method of charging in web marketing. Rather than paying per click, an advertiser pays a bulk rate for a bunch of impressions. They stock up on impressions like paper towels, or cans of soup in wintertime. And it’s all at a set price, which is often lower than à la carte. An ad buyer might pay $5 for every 1,000 impressions, instead of per click. Every time the ad loads on the page counts as an impression.
Total cost of campaign = (total number of impressions / 1,000) x CPM
Total number of impressions = (total cost of campaign / CPM) x 1,000
CPM = total cost of campaign / (total number of impressions / 1,000)
RPM (revenue per thousand impressions)
When it comes to ads, some viewers like certain content more than others. If you are looking to monitor what your crowd is digging when they devour your blog, RPM can tell you by the impressions instead of the dolla dolla bills in your bank account.
Tech Terms explains that using the RPM form of measurement helps to uncover which ads are generating more impressions and, therefore, more money. One ad may generate 10,000 hits a day whereas the other only five. Now you know, no matter how much that ad is paying you per click, how effective it is for your target audience.
RPM rate = (estimated earnings / number of page views) x 1,000