What is the AdSense eCPM?

There are different ways to measure how well an AdSense site is doing. The obvious way is the clickthrough rate, or CTR, which is simply the number of clicks divided by the number of impressions. Many AdSense publishers spend time working on increasing their CTR in order to increase their earnings, which of course makes perfect sense — generally speaking, the more clicks, the more money you'll make.

When comparing sites to each other, though, or when comparing AdSense to other advertising systems, a different number comes into play: the eCPM, short for effective CPM.

What is CPM?

The acronym CPM is short for “cost per thousand” or “cost per 1000″. Replace “1000″ with “M” (the Roman numeral for 1000) and you get “CPM”.

CPM is a standard way to measure and sell online advertising. It's usually associated with banner advertising, but it can also apply to text ads and other ad types. For example, the AdWords site-targeting feature charges on a CPM basis — you pay based on impressions, not clicks.

What is eCPM?

CPM doesn't apply to pay-per-click ads, but you can determine an approximate or “effective” CPM by dividing the earnings by the number of impressions and then multiplying the resulting value by 1000. For example, $0.89 of earnings over 221 impressions gives you an eCPM of about $4.03.

Why use eCPM?

eCPM is useful when considering whether to keep AdSense ads on a page/site or replace it with a different advertising system. Unlike regular CPM, of course, eCPM will vary — sometimes widely — from day to day and page to page. So you really want to look at the historical trends for your eCPM and come up with an average value in order to accurately make that kind of assessment.

It's also a way to compare the AdSense performance of the different sites in your network, especially when you feel you've already done all you can to maximize the CTR of those sites. eCPM is one way to decide which sites are worth driving traffic to, adding content, and so on.

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Eric Giguere is the author of Uncommon AdSense and the award-nominated (that just means it lost!) blog Make Easy Money with Google and AdSense.

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