eCPM, Fill Rate, ARPDAU: How to Apply this Trio of Metrics to Your Monetization Strategy

  • Image
  • 0

Every publisher is eager to evaluate the growth of her audience and revenue. You are likely familiar with the terms eCPM, fill rate, and ARPDAU, but what’s the purpose of each metric and how do you best apply them? Let’s find out.

📊 What is eCPM?

eCPM is a standard advertising metric, and it usually first comes to mind when you need to compare the performance of ad networks.

eCPM stands for Effective Cost per Mille (‘mille’ means ‘thousand’ in Latin). In other words, eCPM demonstrates what you earn per 1,000 impressions. The formula is the following:

eCPM = (Total Revenue / Total Impressions) x 1000

On the left side of the formula, the total revenue from one particular ad network is divided by the total number of impressions you received, showing how much you earned. Because eCPM is the price for a thousand impressions, you’ll need to multiply the number by thousand.

At first glance, eCPM seems to be the perfect instrument to compare the performance of two ad networks. The higher eCPM is, the more you receive from an ad provider per thousand impressions. Simple, right?

However, eCPM can be surprisingly unreliable. Let’s turn to math to see the catch.

Let’s say you have two ad networks: TomsNetwork and JerrysAds. Your eCPM comes out at $5 for TomsNetwork and $2 for JerrysAds. Who’s the winner? A) TomsNetwork? B) JerrysAds? Or is it C) not have enough information to decide?

If you picked C) you’re the real winner here! There’s no way to answer this question accurately without knowing the revenue and impressions at hand. To make the most informed decision, you have to look at the big picture. With TomsNetwork, you received $5 per 1000 impressions during a week’s time while JerrysAds gave you $20,000 per 10,000,000 impressions in the same time period.

📊 Don’t Limit Yourself to eCPM Alone

It is important to know your eCPM rate. However, at Appodeal, we consider the evaluation of ad performance by eCPM alone a bit outdated. In fact, this metric says nothing about how exactly you earn money.

Keep in mind that it’s only a comparative figure; the total number of impressions can influence it radically. Consequently, eCPM isn’t particularly suitable for evaluating your provider’s performance or making a revenue forecast. In order to estimate the effectiveness of a given ad network, you’ll need to dive deeper into metrics and data.

For example, take the time to compare eCPM with fill rate. Fill rate calculates the rate your ad unit is filled in with provided ads. A perfect fill rate is 100%, meaning that all of the ads your app requested were delivered and displayed.

Unfortunately, 100% fill rate is difficult to achieve as many factors influence it such as a lost connection, low phone battery, or a failed network. On the other hand, the fill rate shouldn’t be too low; if it goes down all of a sudden, check the app’s stability and your networks. Even if the eCPM is high, bad fill rate can be the reason of low revenue, so you must consider them together as demonstrated below.

Back to our two ad networks: TomsNetwork and JerrysAds.

TomsNetworks’ eCPM from the last month was $10, whereas the fill rate was 20%. On the other hand, JerrysAds’ eCPM equaled $3 with 90% fill rate.

Basically, it means that TomsNetwork displayed expensive ads once every five times, whereas JerrysAds delivered cheaper ads, but consistently. With an equal number of impressions, the second option is preferable.

📊 Still Not Sure? Check ARPDAU

It’s impossible to discuss metrics without considering the most important factor of all: revenue. At the end of the day, apps are developed to make their owners money, aren’t they? We suggest evaluating ad performance with ARPDAU or Average Revenue per Daily Active User.

ARPDAU shows how much money you earn from a daily active user. The metric is based on the average number of daily active users, your core audience. The formula is simple:

ARPDAU =  Daily Revenue / Daily Active Users

You have two apps with the same DAU at 15,000. App A works with TomsNetwork while App B is on board with JerrysAds. You’re curious to see how much revenue each active user is bringing in per app.

With TomsNetwork, App A has a daily revenue of $4,000 while AppB comes in at $4200. To determine your ARPDAU for each respective app, simply divide the revenue by your DAU. In this case, App A has an ARPDAU of .26 while App B is at. 28. The difference in these two figures might not appear as significant at first glance but after consideration, you can see that the potential impact on daily and overall revenue is huge.

ARPDAU helps estimate how changes influence monetization. By monitoring your ARPDAU, you can see how engagement campaigns, sales on in-app purchases, deliberate user segmentation, and the like affect your revenue.

Use it to assess the effectiveness of personalization made via Segments or to determine if users are spending more (or less) than they were yesterday, last week, and so on. Overtime, you can use the insights you glean from analyzing ARPDAU to build a more successful monetization strategy.

ARPDAU applies to networks delivering 1000 impressions, as well as to networks delivering 1,000,000 impressions. This metric is neither influenced by users fluctuations nor by the number of impressions. Even if your audience multiplies tomorrow, ARPDAU will remain an objective indicator of your app’s revenue.  For that very reason, always place ARPDAU at the forefront of your monetization strategy while keeping a close eye on eCPM and fill rate.

✅ Need a quick checklist to get started with better metrics analysis? We’ve got you covered:

1. Know you eCPM, but always compare it with revenue.

2. Check the fillrate of every ad network in your app.

3. Monitor your ARPDAU to keep track of the effect changes have on monetization results.

Tags: ,

This is a unique website which will require a more modern browser to work! Please upgrade today!