OKO Deep Dives put a single metric under the microscope to answer any question you might have. This Deep Dive looks at one of the core metrics in monetisation; Impression RPM. Although one of the simpler metrics, Impression RPM is the basis of many more nuanced measures so a key metric to properly understand.
What is Impression RPM?
Impression RPM is a literal measurement of how much revenue is generated per thousand impressions. As with other metrics, RPM stands for Revenue Per Mille, with “mille” meaning 1000. Impression RPM (revenue per mille) is the sell-side equivalent of Impression CPM (cost per mille) on the buy-side. An impression is counted each time an ad is rend to a user’s device, meaning that Impression RPM is a measure of how much revenue is generated for each ad actually served to a user.
Impression RPM differs from CPM in that it focuses on how much a publisher will earn, whilst CPM focuses on how much an advertiser will pay. It is often said that they are the same metric, but with different names, but this is rarely the case. There are often many steps between an ad being bought and an ad being served. The costs involved in each step can mean that there is a considerable difference between the CPM of an impression (the cost of that impression to the buyer) and the RPM of that same impression (the revenue that it actually generates for the publisher).
Impression RPM formula
Impressoin RPM is a simple metric. To calculate Impression RPM you need to know the total earnings (revenue) and the number of impressions.
Impression RPM = (Revenue / Impressions) x 1000
For example, if you had 25,000 ad impressions and an Impression RPM of $3, you would receive $75.
When calculating Impression RPM it is important to start with accurate base numbers to get a useful result. For both Estimated Earnings and Impressions, you should be sure to include values from all traffic sources applicable to the calculation you are trying to do. This should include those generated from pass-backs if you are using any ad waterfalls.
How to use Impression RPM
Impression RPM is most useful when comparing like-for-like inventory. For instance, split testing two set-ups into the same inventory.
Impression RPM is a measure of how much you are being paid for every impression you serve. It is an important metric to monitor progress towards increasing value, but it cannot be trusted blindly. For example, one sure-fire way to increase your impression RPM is to remove your least valuable ad units. This will result in a higher Impression RPM, although you would actually earn less.
How to increase Impression RPM
As mentioned above, it is important to keep an eye on overall earnings when optimising for Impression RPM. If you don’t, you could end up earning less from chasing an abstract metric. To improve Impression RPM in a positive way (on like-for-like inventory), you either need to attract higher bids on that inventory or improve the way you resolve those bids. Here’s a few ways in which you can attract higher bids:
Increasing the value of your inventory
- Produce more valuable content that your audience wants to consume and advertisers want to place their ads on.
- Consider using more valuable ad formats and sizes, such as video ads or leaderboard ads.
- Work on improving overall viewability and engagement
Increase exposure to advertisers
- Introduce more bidders to your inventory through Header Bidding and Open Bidding. More bidders means more chance of matching an advertiser to a user through Cookie Matching.
Ensure an efficient auction
- Header Bidding and Open Bidding both utilise Real-Time Bidding making the auction more efficient and ensuring that the highest bidder actually wins.
Impression RPM vs CPM
Impression RPM and CPM are ultimately the same metric though both terms are used interchangeably. The differing terms are used to reflect cost (CPM) from the advertisers perspective and revenue (RPM) from the publishers perspective.
Impression RPM vs Ad Request RPM
Ad request RPM is calculated by dividing estimated earnings by the number of ad requests made, then multiplying by 1000. The difference between Impression RPM and Ad Request RPM is that an ad request is counted each time a webpage makes a request for an ad request which happens before the ad is rendered and displayed. Impressions, on the other hand, are counted once the ad is returned to the webpage.
Ad request RPM takes into account the fill rate each time an ad is requested whilst Impression CPM does not. For example: A user visits a page and is shown an ad at $2 RPM. The user then refreshes the page but a second ad is not returned and the ad unit remains blank. The Impression RPM would be $2 but the Ad Request RPM would be $1.
Impression RPM vs Page RPM
Page RPM is the estimated revenue generated per thousand page views. It is calculated by dividing estimated earnings by the number of ad requests and multiplying that figure by 1000. A page view is counted each time a user views a page and repeated views are also counted.
Page RPM is dependent on impression RPM, but it is also dependent on the number of impressions served per page (page RPM = Impression RPM * units on page). Page RPM is more useful when optimising layouts, whereas impression RPM tends to be focused more on your ad stack.
Impression RPM vs Session RPM
Session RPM, also known as ePMV, is the amount of revenue generated per thousand visits to your website. It is calculated by dividing total revenue by total sessions and multiplying that figure by 1000. Session RPM differs from Impression RPM in that it informs publishers of how much is earned per visit. Session RPM = Impression RPM * impression per page * pages per session.
Where to find Impression RPM in AdSense
To find Impression RPM in AdSense simply navigate to the ‘Report’ tab, and this metric should be shown by default as part of the overview.
Calculating Impression RPM in Ad Manager
Impression RPM can be obtained by running a report in Google Ad Manager and ticking ‘total average eCPM’ under the ‘Total’ heading.
Impression RPM Pitfalls
Impression RPM is a useful metric that helps publishers determine how much revenue will be generated per 1000 impressions. However, it is only part of the picture and does not represent overall site performance.
For example, a publisher has one above-the-fold ad per page but decides to add another ad unit at the end of the content. The new ad unit will be placed in a less valuable area, therefore, the average Impression RPM will decrease. However, Page RPM will increase because now the page is receiving more ad impressions. In turn, this increases Session CPM and revenue.
Average AdSense Impression RPM
Impression RPMs vary greatly based on both inventory and audience, so comparisons with network averages are not all that useful and certainly not actionable. However, it is widely thought that the average AdSense Impression RPM is around $0.01.
If that number seems low, it should. That average includes vast numbers of lower quality, long tail impressions passed on by higher-paying advertisers. In practice, we would not expect to see publishers perform that poorly.