From Google’s AdSense Glossary, here is their definition of eCPM:

Effective CPM - Cost per 1000 impressions. From a publisher’s perspective, CPM is a useful way to compare revenue across different channels and advertising programs. It is calculated by dividing total earnings by the number of impressions in thousands. For example, if a publisher earned $180 from 45,000 impressions, the CPM would equal $180/45, or $4.00.

This measure can be misleading. For example, there are actually two ways that eCPM can be calculated for one of your publishing channels:

  1. Per impression ads - In your AdSense reports panel, for the current day, find a channel both with no clicks and in which the eCPM has a non-zero value. What does this mean? It’s the average that this channel could earn for 1000 impressions (legitimate pageviews). That means that any invalid traffic, including engine spiders, etc., are filtered out. This value is calculated based on the ads that this channel is displaying for which one or more advertisers are offering “per impression” payments. You do not necessarily have to have 1000 or more impressions, as the earnings are pro-rated. So if you have an example eCPM of $0.50 for a channel, and the number of page impressions are, say, 517, then you should earn $0.50 x (517/1000), or about 26 cents. Whether you get such eCPM seems to depend on both the topics of your channel and the day of the week. This value may change throughout the day for a channel.
  2. Per click ads - In your AdSense reports panel, for the current day, find a channel with clicks. The corresponding eCPM value is probably much higher than for a channel with no clicks. This value is dependent on only the number of page impressions and total earnings for the channel. As an example, say that you have 20 page impressions when a visitor clicks. Say that the click earns you $0.10. That means that your eCPM is (1000/20) x $0.10 = $5.00 per 1000 impressions. This is a completely misleading value. If you get another 230 page impressions through out the day for this channel without any further clicks, and with no per-impression ads showing, then your eCPM becomes (1000/250) x $0.10 = $0.40 per 1000 impressions. This version of the eCPM has become meaningless. It’s only a rough indicator of what you could earn with the channel for that day.

I’m only guessing, but I think that the second version of eCPM only becomes meaningful if you have a high-traffic site, with a relatively consistent Page CTR for the channel (measure over a long term of at least 6 months). In other words, it’s only useful as a long-term indicator of what you may earn in the future.

(c) Copyright: 2006-present, Raj Kumar Dash, http://blogspinner.countwordula.com/

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