Friday, January 4, 2008

Adsense CPM is it important

New Adsense users seem to get very worried about the eCPM figure varying for their sites or blogs. Usually all this worry about effective Cost per Thousand page impressions ( which is what eCPM is) is completely unnecessary and pointless - in particular when you are just starting out with your blog or website with Adsense on it.

Let see what eCPM actually is. eCPM is basically just a statistical tool that shows you what your effective earnings are per 1000 impressions. It does this based on your current rate of earning and assumes that this is typical. The result of this is that eCPM can vary quite a lot over time.

Also when the numbers of page impressions and the numbers of clicks and amount of earnings are relatively small these fluctuations tend to be wilder - this is just a consequence of the way this statistic works and is not something you should waste time worrying about.

Lets imagine that you have achieved 100 page impressions. You have earned 10 cents for these 100 impressions. This gives earnings per 1000 impressions (eCPM) of $1. eCPM =(earnings *100)/1000 (If you had 200 page impressions with 10c earnings then eCPM would be 50c.)

Note: That equation works if you are quoting earnings in cents ie 10c etc. If you are using earnings in dollars then its simply earnings/1000.

So each page impression that shows up new in your AdSense report is going to change your eCPM figure - the figure will fluctuate as page impressions and clicks come in at a varying rate over time. So short term variation to eCPM is not something to go grey haired about.

Over longer periods of time it can be worth thinking about the eCPM figure because it is more stable and reliable and is then telling you something about the effective earning capacity of those pages in relation to the amount of traffic that they get.

If you are still unclear then leave a comment below and I will try to help.