Difference Between CPM and RPM

Jun 26, 2022 · 5 min read ·

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CPM and RPM the words related to the online advertisement industry. CPM stands for cost per mile thanks to revenue per mile.

CPM vs RPM

The main difference between CPM and RPM is that CPM is from the standpoint of an advertiser and RPM is from the standpoint of a publisher.

When an advertiser wants to run an ad campaign, we will use the CPM campaign in which he will be charged for the number of impressions for his ad. The metric used to signify the performance of the ad campaign is known as CPM.

When a publisher wants to show add on his site or mobile app then he will be paid for the number of impressions that an ad was served on his website or mobile app. The metric used to signify the amount of money that the publisher will earn is known as RPM.

Comparison Table Between CPM and RPM (in Tabular Form)

Parameter of Comparison	CPM	RPM
Meaning	CPM means Cost Per Mile that is how much the advertiser will be charged on showing 1000 impressions for his ad.	RPM means Revenue Per Mile that is how much a publisher will earn on showing 1000 ad impressions on his web property.
Calculation	CPM is calculated by dividing the total cost incurred by the advertiser with several impressions and then dividing that by 1000.	RPM is calculated by the ad broker. The publisher has no control over RPM numbers.
Use	This metric is used to test which ad campaign is performing better for the advertiser.	This metric tells the publisher if he is being paid a good amount as compared to another ad network/broker.
Optimization	When a CPM campaign is started by the advertiser, artificial intelligence is used to decide what is the best target audience for the campaign.	The publisher can try to optimize his RPM by creating multiple ad placements and testing different types of ads like text, link, image, and video ads.
Cost	The advertiser is billed per 1000 impressions.	The ad network/broker takes a commission cut and transfers the remaining amount to the publisher.

What is CPM?

CPM or cost per mile is a cost that an advertiser will pay for running his brand awareness or product awareness campaign. CPM campaigns are the default campaigns that are supported by all the ad brokers in the online advertisement industry.

The process of creating a CPM based campaign includes the advertiser to create an ad copy for the ad deciding the daily budget that the advertiser is willing to spend on the ad campaign. The budget is the total amount of money that the advertiser wants to spend.

Once the ad campaign has been running for some time, the CPM is calculated by dividing the amount of money on the campaign by the number of impressions delivered for the ad and then dividing that number by 1000.

It is worth mentioning here that when CPM based campaign is launched, the CPM is high but as the artificial intelligence comes to know more about the target audience, the campaign is optimized automatically. This optimization results in lower CPM rates once the campaign has Run for a few days.

What is RPM?

RPM is known as revenue per mile. This indicates the amount of money a publisher will get after displaying 1000 Impressions on his online property.

RPM is calculated by dividing the amount of money earned by the publisher the number of ad Impressions delivered by him. As with CPM, here also RPM gets optimized once it has run for a few days. The artificial intelligence technology identifies the audience’s interest on the web property of the publisher and then delivers matching interest-based ads to the audience.

Since the publisher does not have any control over what kind of ads will be served on his web property, he may be delivering other types of AD campaigns.

The earnings report shown on the ad broker portal will show the and RPM to the publisher.

Main Differences Between CPM and RPM

CPM is from the perspective of the advertiser, whereas RPM is from the perspective of the publisher.

CPM is the cost that an advertiser will pay his ad has been served 1000 Impressions. RPM is the amount of money that a publisher will earn once 1000 Impressions have been served on his property.

CPM metric is used to compare the performance of two or more ad campaigns by an advertiser. RPM metric is used to compare the performance of two or more ad networks bi a publisher.

Apart from CPM, the other types of ad campaigns available to an advertiser include CPC, CPI, and CPA with the option to start any campaign he wants. Similarly, for a publisher, the campaigns available are CPC, CPI, and CPA with no option to choose from them.

The advertiser has the option to change his ad campaign based on the marketing objective. The publisher does not have much control over the ad campaign that will be run on his property. The best a publisher can do is to optimize the placement of ads so that more people can see the ads and click on them.

Conclusion

CPM and RPM are both the metrics for 1000 Impressions of an ad. While CPM is relevant to an advertiser, RPM is relevant to a publisher.

If you are an advertiser you should focus on optimizing your ad campaigns based on the CPM and if you are a publisher then you should focus on optimizing your ad placements based on the RPM.

References

https://sproutsocial.com/glossary/cpm/

https://clevertap.com/blog/cpm/

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