Comparing apples and oranges: RPM rate vs. CPM rate vs. Session RPM
Many Publishers considering running Healthy Ads on their site have run, or are running ads with another ad network. Traditionally, most ad networks used CPM to calculate ad performance. However, over time competing ad networks have come up with ways to conflate ad performance and have introduced new revenue reporting models to do so.
What is CPM rate?
CPM is an acronym for Cost Per Mille (mille means “thousand” in Latin) and is the ad unit rate per 1000 ad impressions. It is the price advertisers pay to have their ad shown 1,000 times. It is reported as an actual rate for advertising and is the common unit for the pricing ads online. It is the only ad unit pricing standard accepted by the IAB (Interactive Advertising Bureau)
What is RPM rate?
RPM is an acronym for Revenue Per Mille (mille means “thousand” in Latin) which is basically “revenue per 1000 page views” of a web page. So unlike CPM, which calculate the rate/price per ad unit, RPM is aggregating all ads on the page and calculating a rate. For example, If you have 4 ads on a page your RPM will be higher than if you just have 2. RPM doesn’t represent how much you have actually earned; rather, it’s calculated by dividing your estimated earnings by the number of pageviews, impressions, or queries you received, then multiplying by 1000.
RPM rate = (Estimated earnings / Number of page views) * 1000
What is a Session RPM rate?
Session RPM is the newest revenue reporting model and is embraced by a few questionable ad networks. The RPM definition still stands as Revenue Per Mille (one thousand), but now instead of page views they are calculating and aggregating ads per user session. This move is simply to inflate that reported “rate” even more. As you may notice in your analytics suite, sessions are typically lower than page views (just as page views are lower than ad impressions), and dividing by that lower number gives the optics of higher rates even though nothing has changed. Not only is this dishonest reporting, but can make it very hard to compare various ad networks and may leave you thinking you are earning more, when in fact your ad performance is suffering.
Why do some Networks report in RPM or Session RPM and not CPM?
As a rough rule, Session RPM and RPM will always be higher than CPM because it’s an aggregate of all the ad units seen during a user session or on a page. Let’s say you have a Page View RPM rate of $4.00 from an ad provider. If you only have 2 units, then the CPM per unit will be $2.00. Remove the units of measurement (i.e. RPM or CPM) and $4 is always going to sound better than $2 right? Again this goes even further with a Session RPM by aggregating all the ads seen during a session, a session RPM could be as high as $50 depending on how many ads you have per page and how many pages users are viewing per session. It also gets even harder to clearly calculate.
The other reason that other ad networks report to Publishers on a RPM basis and not CPM is they don’t actually sell all their ads on a CPM rate. Many Ads are sold on a CPC rate (Cost Per Click) some are CPA (Cost Per Acquisition), both of which put all the risk on the Publisher to maximize advertising performance. So, if you run, let’s say Google Ads and don’t get a click, you won’t earn any revenue. Not really fair, is it?
Healthy Ads’ CPM rates for Publishers
Healthy Ads prices CPM at the ad unit level and we sell ads on a CPM basis to our advertisers and their agencies. We think of your website like a billboard with an audience of grocery buying consumers, and we believe that you should be paid when consumers are exposed to brand advertising and brand message. For every 1000 impressions, we’ll pay you on a CPM rate. 4 units on a page and you’ll earn CPM revenue for all ads. We commit to transparent pricing for our publishers and our advertisers.
