Date First Published: 12th August 2022
Topic: Web Design & Development
Subtopic: Web Advertising
Article Type: Computer Terms & Definitions
Difficulty: MediumDifficulty Level: 6/10
Learn more about what RPM is in this article.
In web advertising, RPM stands for Revenue Per Mille. It represents the amount of money a publisher will earn per 1000 impressions. 'Mille' is a Latin word for one thousand and it is not to be confused with 'mile'. It is the estimated advertising earnings that they could receive per 1000 ad impressions, which means every time an ad receives 1000 unique impressions. RPM is similar to CPM (Cost Per Mille), which is how much the advertiser has to pay per 1000 ad impressions, but instead of measuring the cost per 1000 impressions, RPM measures the revenue.
RPM may also be known as eCPM (Effective Cost Per Mille). However, it is more accurate to say 'page RPM'.
RPM can be calculated using this formula:
Total revenue ÷ Total impressions x 1000
For example, if a website generated £12.50 of ad revenue by clicks and has 5000 unique ad impressions per day, it would be calculated by this method:
£12.50 ÷ 5,000 x 1000 = £2.50 RPM
If a page RPM is £4.00 and the website gets 4,000 unique impressions per day, the daily advertising revenue would be calculated by this method:
£4.00 x 4 = £16.00 daily advertising revenue
Page RPM and impression RPM are not the same things. Page RPM is the amount of revenue a publisher earns from 1000 page views, whilst impression RPM is the amount of revenue they earn from 1000 ad impressions. The main difference between these two is that there are normally several ads on each page. This means that each page view can be thought of as earning the revenue from several ads all at once.
When calculating page RPM, the revenue from all ads is calculated and added up on the page, making page RPM much higher than impression RPM. The more ads on the page, the higher the page RPM as page RPM is a combination of the impressions from all ads. Impression RPM does not count the number of ad slots.
If a website only had one ad, the impression RPM and page RPM would be identical. With multiple ads, the individual ads will often have a lower impression RPM than the page RPM.
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