How to Compute Effective Page CPM
One of the most common confusions about online advertising amongst bloggers is how to compute for their ad rates. I’ve previously wrote about how to create an advertising rate card and how to analyze conversions or ROI, but the truth is not all page views are created equal.
There will be niche or industries that will draw more ad dollars than others. There will be highly converting demographics and cashless age groups. I recently learned that the lifestyle and business niche are more attractive than say technology; or a niche that targets women than men have higher ad value per eyeball (women are shoppers); or sites that attract visitors with age range of 18 and below converts very low (which is obvious since they don’t have credit cards).
Beyond that, there’s the topic on effective CPM (eCPM). The Inside AdSense blog recently published a series on “Diagnosing & Treating Revenue Fluctuations” which explains CTR, CPC and eCPM. However, for those who are running campaigns other than AdSense, the effective page CPM will be totally different.
In essence, effective page CPM is the total revenue derived for every 1,000 ad impressions of a blog or website. That constitutes all CPC ads (AdSense, Kontera, Chitika), all link ads (TLA, TLB), all direct ads, affiliate ads and all other ads that are dependent on your traffic.
Here’s a rough example:
I have 3 AdSense ad units per single post/page. Let’s say the top 468×60 ad unit has an eCPM of $1.50, the bottom square (336×280) has $1.00 and the link ad units at the sidebar gets $0.50 (your eCPM values are taken from the AdSense reports). My total page CPM for AdSense becomes ($1.50 + $1.00 + $0.50) $3.00, which means for every 1,000 page views, I am expected to get $3. The other 2 are ad sources from Kontera ($0.50 CPM) and Chitika ($0.125).
Now, I also have ads from TLA and they give me $200 per month in total. If I get 200,000 pageviews per month, that takes my CPM to (200k/$200) $1.00. Then, there are direct ads which goes around $800 per month so at 200,000 pageviews, that boils down to a $4 CPM. (Note: numbers do not reflect actual figures and are just rounded estimates.)
In order to get your effective page CPM, all you need to do is add all these CPM figures and the sum total is your overall eCPM. In our example, that should be ($4.00 + $0.50 + $0.125 + $1.00 + $4.00) $9.625. Meaning, if your monthly total pageviews is 200k, expect to net $1,925 (200k * 9.625/1k) per month.
Each ad placement (esp. AdSense, Adbrite, Chitika) will have their own respective CPMs (as pointed above) and their total for that page is the one we computed ($9.625). There will be fluctuations in your net revenues as explained by the series on Inside AdSense — mostly dependent on Cost-per-Cick and CTR values. Nevertheless, you now have a good idea on how to price your direct ads based on these existing CPMs.
Likewise, the next time you try out an ad campaign or test a new advertising model, you’re a little more knowledgeable to evaluate them. This is also one way to determine if switching from YPN to AdSense to Kontera to Chitika (or whichever combination) is more profitable on a per eyeball basis.