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 $1.50PHP 88INR 127EUR 1CNY 11, the bottom square (336×280) has $1.00PHP 59INR 85EUR 0.95CNY 7 and the link ad units at the sidebar gets $0.50PHP 29INR 42EUR 0.48CNY 4 (your eCPM values are taken from the AdSense reports). My total page CPM for AdSense becomes ($1.50PHP 88INR 127EUR 1CNY 11 + $1.00PHP 59INR 85EUR 0.95CNY 7 + $0.50PHP 29INR 42EUR 0.48CNY 4) $3.00PHP 176INR 254EUR 3CNY 22, which means for every 1,000 page views, I am expected to get $3PHP 176INR 254EUR 3CNY 22. The other 2 are ad sources from Kontera ($0.50PHP 29INR 42EUR 0.48CNY 4 CPM) and Chitika ($0.125PHP 7INR 11EUR 0.12CNY 0.91).

Now, I also have ads from TLA and they give me $200PHP 11,737INR 16,950EUR 190CNY 1,456 per month in total. If I get 200,000 pageviews per month, that takes my CPM to (200k/$200PHP 11,737INR 16,950EUR 190CNY 1,456) $1.00PHP 59INR 85EUR 0.95CNY 7. Then, there are direct ads which goes around $800PHP 46,948INR 67,800EUR 762CNY 5,823 per month so at 200,000 pageviews, that boils down to a $4PHP 235INR 339EUR 4CNY 29 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 ($4.00PHP 235INR 339EUR 4CNY 29 + $0.50PHP 29INR 42EUR 0.48CNY 4 + $0.125PHP 7INR 11EUR 0.12CNY 0.91 + $1.00PHP 59INR 85EUR 0.95CNY 7 + $4.00PHP 235INR 339EUR 4CNY 29) $9.625PHP 565INR 816EUR 9CNY 70. Meaning, if your monthly total pageviews is 200k, expect to net $1,925PHP 112,970INR 163,143EUR 1,833CNY 14,011 (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 ($9.625PHP 565INR 816EUR 9CNY 70). 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.