Friday, July 31, 2009

Breaking Down eCPM

Most often, online revenues are measured in eCPM – effective Cost Per Mille (thousand) is the original term, and as expected, it can be highly misleading, so let’s linger with it for a paragraph. This acronym simply stands for your bottom line revenues divided by your relevant page views, and then divided by 1,000, all in the relevant currency. Why divided by 1,000, you ask? Because the actual number was too low. Dividing the page views helped making the number higher and this way more comfortable, but also much more confusing…

For example, if your website had yesterday 20,000 relevant page views and yielded $100, your eCPM was $100 / (20,000 / 1,000) = $5. If you keep a stable average eCPM of $5 and stable traffic of average 20,000 page views daily, your website has a potential of $3,000 monthly revenues (this is by multiplying $5 by your monthly page views divided by 1,000). So why is calculating the potential revenues so complicated? Because every one of these eCPM factors can vary widely according to your website’s circumstances.

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