If you’ve never heard the term revenue per mille, you’re not alone. Despite advertising being the most common revenue channel for online publishers, publisher RPM is still something that’s not well understood.
Why is that, and how can learning about RPM help maximize profitability at your own publication?
Whereas CPM is an advertiser-focused metric, RPM is publisher focused. It’s a holistic measurement of what a publisher is earning through digital advertising, and it’s something you’ll want to keep track of as you continue to grow your digital business.
The Basics of Publisher RPM
Publisher RPM is a common metric that most ad platforms, ad networks, and ad servers use to represent the estimated cost that an advertiser will pay for every 1,000 ad impressions served.
In Latin, mille means thousand. Although we’re focusing on publisher RPM for digital advertising in this article, it’s worth knowing that RPM is a metric that’s used across a spectrum of media channels, including radio, TV, newspaper, magazine, and out-of-home (OOH).
Publisher RPM is calculated by taking the total estimated earnings from all ad units on a page, dividing that figure by the number of views the page receives, and then multiplying that number by 1,000.
There is a difference between page RPM and average RPM. The term publisher RPM is a broad one, meant to encompass all forms. Page RPM is the revenue per mille (thousand impressions) on a single page of a website. Average RPM is when you take that number and average it out over all the pages on a website.
To measure page RPM, divide your estimated earnings by the number of pageviews, then multiply that number by 1,000. That’s your page RPM.
Consider this real world example:
Publisher’s Estimated Earnings = $200
Pageviews = 400,000
Page RPM = ( 200 ÷ 400,000 ) x 1,000
Page RPM = $ 0.5
For every 1,000 impressions on this specific page of the publication’s website, the publisher earned $0.5 in ad revenue.
When comparing overall website performance, it’s worth calculating session RPM, as well. Session RPM is what we use to analyze overall website performance. It shows a website’s ad earnings per visitor. Session RPM is most useful for publishers with multiple landing pages, since it can be used to divide earnings by visitor sessions.
How to Maximize RPM
One of the mistakes that digital publishers make is to focus too heavily on CPM as a measurement for advertising success. CPM is a valuable metric to use when looking at the state of the industry, but it doesn’t provide you with great detail about your own site’s performance.
Two metrics that have great impact on RPM are click-through rate (CTR) and cost-per click (CPC). If you can increase these two metrics, then you will be able to increase your RPM in no time.
As a best practice, publishers should be using page RPM as a comparative metric. That means the publisher can calculate the page RPM for multiple pages and then compare the results to get a better understanding of which pages are providing the best value or generating the highest ROI. Having a clear sense of your average RPM is essential for publishers who want to increase ad revenue.
The more ad types a publisher uses, the most valuable RPM becomes. Although many publishers use the terms RPM and CPM interchangeably, it’s important to understand the differences. Regardless of whether you are using page RPM, session RPM, or average RPM, any of these metrics are going to give you a clearer understanding of the overall performance of advertising on your website.
As digital advertising has grown more complex, more publishers are seeking out support in setting up and managing their online advertising programs. For information on how Web Publisher PRO can help, schedule a consultation and let our team of dedicated publishing pros help take your business to the next level.