How to Increase your Effective CPM

The most common response to my earlier discussion on “How to Compute Effective Page CPM” was how to increase the cost per mil (CPM). Let me clarify that with a simple math.

Let’s put the CPM into a mathematical formula so we can explain how it can be increased or manipulated to your advantage:

For those running on AdSense or other similar pay-per-click network, this is the formula to compute the revenue. Multiply Cost-Per-Click by Click-Thru-Rate and Pageviews.

Now, let’s go back to the formula of CPM:

In effect, to increase CPM, you need to increase Revenue while Pageviews remain constant. OR, decrease your total pageviews while making your revenue constant. Now, we’re in a pickle, right? We all want our pageviews and revenues up as well.

So, what do we really need to do? Here are some scenarios: You earn $500 every month for 100,000 pageviews. Your CPM is $5.

1) If that $500 a month is via direct ads, get more direct ads. The more flat rate ads you get for the same total pageviews, the higher your CPM.

2) You can also ask for a higher flat rate. In essence, you can directly affect your CPM by charging for higher CPM from your advertisers. In this case, instead of selling ads for $5 per CPM, tell you advertisers the rate is now $8. So, even if your pageviews is flat at 100,000, at the end of the month you get $800 instead of $500.

3) If you have a mix of ads (AdSense, TLA, Direct, Chitika), check which ad units have the lowest CPM. Say if the 336×280 AdSense unit at the bottom of your content only gives you $1 CPM, replace it with Chitika and see if it will get a higher CPM after a week or so. Even better, get a direct advertiser and tell them you can give them $2 CPM for that spot.

4) If you run pay-per-click ads, just optimize them to get higher CTR (see Formula #1 above).

5) If you have run-of-network ads as well as pay-per-click ads, put the PPC ads where it will get maximum exposure (thereby getting more clicks) and put the run-of-network ads where it will likely get less clicks (since your revenue from there is based on ad impressions not, ad clicks). The clicks you lost from run-of-network could have went into the pay-per-click to increase your CTR.

Increasing CPM level is tricky actually. Getting more ads is not always the solution, unless they are direct ads and will not affect performance of other ads.

If you can get more ads, get the ones which will not affect the other ads (esp., not competing with clicks-thrus). Explore other avenues that have not been monetized — RSS advertising, Link Advertising, WAP/Mobile Advertising, etc.