When comparing RPM and CPM, there are a few clear distinctions to make. RPM is a metric used to determine the total ad revenue a publisher is set to earn for 1000 ad impressions. CPM, on the other hand, is the amount an advertiser will pay for 1000 ad impressions. Though the two are used interchangeably across the digital media industry.

In this guide, we’ll unpack the meaning of each metric and help you work through any confusion you may have surrounding these key terms. By the end of the guide, you’ll be able to speak confidently about these metrics and impress your team! Let’s jump in…

RPM

RPM or revenue per thousand impressions comes from estimated earnings and impressions that you could earn for every 1000 impressions received.

It can be mistaken as a payment figure, but in reality, it’s more of an estimation of what the publisher could earn from ad revenue.

Since it’s an estimation, it may not always be the exact amount a publisher will get paid for their ad impressions.

RPM is calculated as follows:

RPM = (Estimated earnings / Number of page views) * 1000

Here’s a simple example to further explain RPM.

Let’s say your estimated earnings are $10,000 from 10,000,000 impressions; then you can calculate your RPM as:

($10,000 / 10,000,000)*1000 = $1.00 RPM

On the other end, if your estimated earnings were $7,650 for 6,000,000 impressions, the RPM for that page would be:

($7,650/6,000,000)*1000 = $1.275 RPM

There are also different types of RPM formulas such as page RPM, impression RPM, and ad RPM.

CPM

CPM, on the other hand, is the cost per 1000 ad impressions the advertiser. Most people across the industry are familiar with this term and it’s misused rampantly on the publishing side. As it’s an advertiser-side metric to track.

CPM ads differ from CPC ads. Every time a CPM ad gets served on a publisher website, the publisher earns ad revenue from it. With CPC ads, every time an ad is served on the publisher website and a user clicks on it; the publisher earns ad revenue from the ad.

To calculate the CPM use the following formula:

CPM  = (Cost of the campaign/ Number of total impressions) * 1000

Here’s a simple example to further explain CPM:

Let’s assume the advertiser has a $10,000 ad budget. They launched a CPM ad campaign and received 10,000,000 impressions for their ad campaign. What’s the advertiser CPM then?

CPM = ($10,000/10,000,000)*1000 = $1.00

CONCLUSION

RPM and CPM are similar metrics but RPM is what a publisher wants to focus on. Where CPM is what an advertiser wants to focus on. As a publisher, it’s critical to understand the difference between these metrics to optimize your ad revenues. However, maximizing ad revenues are more than just understanding a few advertising metrics.

Why not focus on what you do best and let the ad optimization experts take care of your ad revenues?

Here at AdsHeavy, we partner with hundreds of publishers to maximize their ad revenues with our team of ad ops experts and proprietary ad technology.

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