Why eCPM is the Most Useless Metric in Ad Monetization
eCPM, or Effective Cost per Mile, is a metric that often attracts the most attention among ad monetization managers and senior staff in game development studios. However, it is also considered to be the most useless metric in ad monetization. In this article, we will discuss the reasons why eCPM should be observed within its proper context and not as a standalone measure. Let’s dive in!
Essence of eCPM
eCPM is a metric that tells us how much money is earned per one thousand impressions (ads) shown to players. It takes into account the value of advertisements based on player actions, such as installs, rather than mere ad views. Understanding eCPM requires considering various factors that can impact its value.
Part 1: Basic Factors
Ad Format
Different ad formats have different eCPMs by default. For example, banners generally have lower eCPMs compared to rewarded video ads and interactive ads. The difference in eCPM is due to the nature of these ads, such as their visibility, interactivity, and call to action. When comparing eCPMs, it is crucial to consider the same ad format.
Country
eCPM varies significantly depending on the country. Countries with higher buying power, such as the United States, Germany, and Japan, tend to have higher eCPMs compared to countries like India, Egypt, Brazil, and Serbia. When comparing eCPMs, it is essential to consider the same country.
Platform
Previously, iOS users had higher eCPMs compared to Android users due to their higher purchasing power. However, with recent changes in IDFA (Identifier for Advertisers), the landscape has shifted. Nowadays, eCPMs can be higher on Android as well. When comparing eCPMs, it is crucial to consider the same platform.
Scale
The scale of a game’s ad monetization can significantly impact eCPM. Optimizing eCPM on a small scale differs from optimizing it on a large scale. Factors such as the variety of ads being shown and the chance of conversion come into play. When comparing eCPMs, it is crucial to consider approximately the same scale.
Mediation Setup
The mediation setup, which includes ad networks, bidding, waterfall setups, and optimization, has a significant impact on eCPM. However, focusing solely on mediation setup without considering other factors can lead to incorrect conclusions. When discussing eCPM, it is vital to acknowledge other factors as well.
Part 2: Advanced Factors
Player Age
Player age within a game can affect eCPM. Data shows that players who have spent more time in a game tend to have lower eCPMs compared to new players. This could be due to ad repetition or lack of interest in the content. Comparing eCPMs between games should ideally consider similar player age groups.
Usage Rate
Usage rate, which measures the average number of ads shown to a player who has watched at least one ad, is an important metric often overlooked in eCPM discussions. As the number of ads shown increases, the likelihood of conversion decreases, resulting in lower eCPMs. When comparing eCPMs, it is crucial to consider similar usage rates.
Blocking Strategy
Ad Monetization Managers have control over which ads are shown in their games through blocking strategies. A more restrictive blocking strategy can lead to fewer advertisers competing for ad impressions, potentially resulting in lower eCPMs. When comparing eCPMs, it is important to discuss the extent of blocking strategies.
Player Source
The source of players in a game, such as organic traffic or paid campaigns, can influence eCPMs. Different user acquisition strategies and campaign optimizations can result in different eCPMs. When comparing eCPMs, it is crucial to consider the player source and type of user acquisition campaigns running.
Advertiser Side
The demand side of the ad monetization equation, which includes the behavior of advertisers from other games, can greatly impact eCPMs. Changes in budgets or blocking of games can affect competition and eCPM values. When comparing eCPMs, the demand side should also be considered.
Conclusion
Comparing eCPMs of different games without considering the many factors outlined above can lead to inappropriate conclusions. Instead of focusing on absolute eCPM values, it is more beneficial to discuss strategies for optimizing mediation and other ad monetization setup elements. By understanding the complexities of eCPM and its context, ad monetization managers can make more informed decisions to maximize ad value in their games.