The Difference Between Adsense Ad RPM vs Page RPM

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Google Adsense is a program is run by Google. The program allows the publishers around the Google network of content sites to offer automatic text, video, images, advertisements to name a few. All of this is directly targetted towards the site content and the audience.

If there’s one thing online marketing has, it’s a lot of acronyms!

Three, in particular, are used a lot in media buying:

  • CPM.
  • eCPM.
  • RPM.

In self-serve paid media platforms like Google Ads or Facebook Ads, most brands and advertisers think of things in terms of PPC, or pay per click: when a user clicks, the advertiser pays.

It doesn’t rely on the CPM model at its forefront, so terms like CPM or RPM might be confusing at first to advertisers who have only done PPC.

These measurements are more commonly used in programmatic ad buying, but they can also help you “equalize” costs to understand what one channel costs relative to another.

To demystify the acronyms and where they fit into the paid media ecosystem, let’s look at each type, and some examples.

One thing to keep in mind with media money is there are two parties involved:

  • The advertiser who is making the media purchase.
  • The publishers, which are the websites actually showing the ads.

The acronyms that float around apply to these two specific parties.

What Is CPM?

CPM stands for “cost per thousand impressions.”

It’s the dollar amount an advertiser pays to show their ad 1,000 times.

Note this is an advertiser metric, not a publisher one.

In other words, it’s what an advertiser pays for their ad to show.

It’s not what a website earns when they show the ad 1,000 times. (That’s RPM, which we will cover shortly.)

Typically, the more valuable the site traffic is, the higher the CPM will be.

Calculating CPM follows a simple formula:

Cost divided by Impressions times 1,000

This breaks down the cost for a single impression, and then multiplies it by 1,000 to get the CPM.

Let’s look at an example.

Say you contract for a programmatic display buy, and you have $30,000 to spend on the campaign.

You run estimates on how many impressions it will get you, and it comes back at 2,500,000 impressions.

$30,000 divided by 2,500,000 times 1,000

Based on the calculation, you’d be paying a $12 CPM.

CPM can also help you understand the relative value of audiences within a platform like Facebook when you view them next to each other.

Here’s an example of a Top of Funnel (so, wider targeting), Middle of Funnel (warm audience targeting), and Bottom of Funnel (hot prospects/site visitors) CPMs.

Notice how the CPM is lower for the broader targeting vs. the bottom of funnel users?

The bottom-funnel users are not only a smaller pool a brand is trying to reach, but they’re also likely to buy – and all the other advertisers are probably trying to target those same people.

What Is RPM?

RPM stands for “revenue per thousand impressions.”

Unlike CPM, RPM is a publisher-side metric.

It’s a measurement of how much a publisher (or website) is earning for every 1,000 times it shows an ad.

Essentially, it’s the rate at which they’re making money – so it’s a very important metric!

The equation will look very familiar since all you’re doing is swapping out the advertiser metric of cost for the publisher metric of earnings:

Ad Earnings divided by Impressions x 1,000

If a website earns $500 and showed 100,000 ad impressions, their RPM is $5.

So every time their site serves 1,000 ad impressions, they earn $5.

What is Ad RPM?

Ad RPM or the ad revenue per one thousand impressions, is calculated by dividing your estimated revenue by ad impressions and then multiplying by 1000. See formula below:

Ad RPM = (Estimated earnings / Ad impressions) * 1,000

What is Page RPM?

Page RPM is the rate that the advertiser has to pay for every 1,000 ad impressions viewed per page. It is calculated by dividing your estimated revenue by the number of page views you received and then multiplying by 1,000.

Page RPM = ( Revenue / Number of page views) x 1,000

What is Session RPMs?

This is slightly different, in that the value is coming down to site sessions, and not necessarily the overall ad impressions.

In other words, it shows the revenue per session on the website – more like measuring the value of a visitor versus a page loading and showing an ad.

In this calculation, you’re swapping out ad impressions for sessions, like this:

Ad Earnings divided by Number of Sessions times 1,000

So if a site earns $500, and had 60,000 sessions, their session RPM is $8.33.

What Is RPM on YouTube?

There’s always an exception, isn’t there?

There is a different RPM metric on YouTube.

But it means something slightly different.

On YouTube, RPM means “revenue per mille” – or, how much a creator earned per thousand views.

Here’s how it’s calculated:

All Revenue Reported in YouTube Analytics x 1,000 / Total Views in the Same Time Period

Why It’s Important to Know These Abbreviations

If you only work in PPC, you may be wondering if you need to know these abbreviations when you’re already analyzing so much data.

Let’s put it this way: it can’t hurt you to understand this ecosystem.

If you’re going after a high-dollar CPC with a long purchase cycle, understanding cost relative to what you’re getting is part of being a solid media manager.

In long sales cycles, the top and mid-funnel phase can last a very long time, and you have to weigh the cost of a high-dollar direct response environment vs. a larger-scale, cheaper option.

Ad RPM vs. Page RPM

While these two metrics are quite similar, there is a substantial difference.

Ad RPM tells the publisher the cost that the advertiser will have to pay for every 1,000 ad impressions served on a website, while Page RPM metric helps publishers understand the performance of their ads on a page level.

Page RPM demonstrates the rate that publishers are paid for ad impressions on their web pages and allows them to identify low and high earning pages and strategize how to improve their performance. By using this metric, you can evaluate the performance of multiple pages on your website.

So, the next question is, what is a good RPM?

While this is an excellent question to ask, there is, unfortunately, no generic answer to this question. Several factors determine your page RPM. Here are some to keep in mind:

  • Site niche
  • Content quality
  • General seasonality
  • Audience geographics
  • Audience demographics
  • Audience seasonality
  • Topic trends and breaking stories

Higher Page RPM but Lower Ad RPM

One issue that we frequently see with publishers who hadn’t optimized their ad stacks is that upon optimizing their ad stack, their page RPM increases while their ad RPM decreases. Why does this happen? One of the most common scenarios is that publishers with unoptimized systems often have substantial unfilled impressions. Most ad reporting technologies, including Google Ad Manager, do not report these impressions as $0. Instead, they’re not counted at all. So if a publisher has a site with 70% fill at $0.40 ad RPM, we will frequently crank that up to 95%+ fill. If the additional filled impressions average less than $0.40 ad RPM, then the overall ad RPM will fall, even though the site is making more money overall. This is why although ad RPM is useful in ad optimization, it’s usually not a primary KPI for ad optimization.

In most cases, session RPM is the primary KPI for ad optimization. This is because some ad technologies can be so abusive that they reduce the averages pageviews per session, reducing overall session RPM.

Page RPM and Ad RPM form part of a publisher’s arsenal of metrics used to analyze and optimize ad performance. While calculating and understanding these metrics might be easy; implementing the correct strategies to optimize your ad revenue is something entirely different. Don’t leave it up to guesswork! Get the ad optimization experts to optimize your ads and help you maximize your ad revenue.

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