Understanding CPM, RPM, RPS, and Your Revenue

There are several key metrics to measure your ad revenue and tactics which you can use to optimize your monetization. The most important step is to make sure you have great content and the visits will follow. But these metrics are important to pay attention to in order to understand how your inventory is performing. They are CPM, RPM, and RPS. Let’s consider how they relate to each other and how they affect your revenue.

What is CPM?

CPM stands for cost per mille or cost per 1000 impressions, and it relates specifically to individual ad units on the page. CPM is a key metric for advertisers as it conveys the cost for every 1000 ad impressions. For example:

CPM = (Campaign budget / number of impressions) * 1000

For example, if an advertiser has a budget of $20,000 for a campaign and wants to buy 8,000,000 impressions on your site.

CPM = ($20,000 / 8,000,000) * 1000 = $2.50 CPM

What is RPM?

RPM stands for revenue per mille or revenues per 1000 pageviews. RPM is a key metric for publishers to measure the value of different types of ad pages. To understand your RPM, take a look at the earnings of different page layouts, traffic sources, or content types.

RPM = (Revenues / pageviews) * 1000

If, for example, on a given day your total revenues were $10,000 and you had 2,000,000 pageviews.

RPM = ($10,000 / 2,000,000) * 1000 = $5 RPM

In this scenario, we see that RPM is higher than CPM because the RPM calculation includes the earnings from every ad unit on the page.

What is RPS?

So, CPM looks at individual ad units, and RPM looks at pageviews. Now let’s look at RPS which takes into account overall session revenues. RPS stands for revenues per 1000 sessions. RPS is really the king of all metrics because it tells you how much you are earning for the users you are bringing to your website, and how many page views per session/visit.

RPS = (Revenues / sessions) * 1000

So if yesterday, your total revenue was $10,000 and you had 1,000,000 sessions.

RPS = ($10,000 / 1,000,000) * 1000 = $10 RPS

We can see that RPS is higher than RPM as it takes into account the additional pageviews that a visitor views in a session.

Is One Better than the Other?

All three of these metrics are important, however, take a holistic approach and always begin by analyzing your RPS. Then use CPM and RPM to drill down for additional ways to increase your earnings. RPS provides a complete view of the user’s visit to your site: page layout, page load time, bounce, fill, time on page, page views, and refresh.

  • If you maximize for CPMs by adding floor prices, as an example, this will increase your CPMs but decrease fill, leading to lower RPM and RPS.
  • If you maximize RPM by adding more ad units to a page, this can lead to decreased RPS and page views due to crowded pages and slower load times.

As you see, maximizing RPS calls for finding the right balance around increasing CPMs and pageviews. But what it really comes down to is getting the most value from every user who visits your site. This means improving the user experience to keep them on your site and driving more impressions through multiple pageviews.

Tips to Improve RPS

Here are a few ways to improve your RPS to maximize overall revenue. Adapex works with our publishers to test, analyze, optimize, and test again to find what works best. We recommend you do the same. A few things to consider:

  • Implement a comprehensive technology solution that gives you all resources you need to intensify competition for your inventory, analyze performance, and connect to identity solutions
    • Adapex’s m4 Tech Suite™ offers you all this, easily implemented and packed with sophisticated features
  • Improve your Core Web Vitals…improve user experience
    • As we noted above, a good experience for your user is critical to increasing page views, leading to more impressions and increased revenues
  • Smarter Header Bidding.
    • We recommend a hybrid approach
  • Improve viewability.
    • Advertisers pay more for ads with higher viewability
    • High impact units deliver good viewability

Conclusion

As with any metrics that correlate to revenue, track, analyze and optimize. The first step is creating relevant and engaging content for your users, as they are your most valuable asset. This will naturally lead to improved CPMs, RPMs, and RPS. And if you need help after that, working with the right tech and the right team can help.

Adapex works with 700+ publishers every day to ensure they are maximizing revenue on every impression. Our award-winning tech has helped our publishers see uplifts from 30-500%. And our experienced adops team takes on the heavy lifting on your monetization strategy so you can focus on creating the right content. Interested in hearing how we can help you improve your metrics and drive revenue? Request a free demo now.

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