I recently came across this question in the Vungle support forums:
“Why is my eCPM/revenue fluctuating so much day by day when I am serving impressions every single day?”
This reflects the reality for many mobile app publishers. They are mislead by the term eCPM to think they are getting paid by the amount of impressions they serve. The reality is that the eCPM revenue is driven mostly by the amount of interactions the user has with the ad and the app that is being advertised.
Understanding what drives eCPM
Typically, an ad network will have a mix of advertisers with different payment models: CPI, CPC and CPM. In the mobile app industry over 80% of the volume is CPI campaigns:
To calculate eCPM generated by CPI campaigns, consider this formula:
To calculate eCPM generated by CPC campaigns, consider this formula:
To calculate eCPM generated by CPM campaigns, consider this formula:
As you can see there are quite a few factors that effect the eCPM and any change in these factors is reflected in your revenue.
Some user segments click and install more
In CPI campaigns, the impact of changes in CTR and IR (install rate) is quite big. As you learn to segment your user base and learn more you will see that some segments are more likely to install and click compared to others. A new marketing campaign might bring a bunch of users who clicks and installs more. This might drive your eCPM up.
Users get board with certain ads
Another aspect to think about is the user experience with advertising. Lets imagine that an app publisher decides to double the amount of advertising in his app. The publisher might expect to double the revenue but in most cases the revenue will actually be driven by installs and clicks so the CTR and IR will drop and will negatively impact the eCPMs. This is especially true if there is the ads are repeating themselves. There is a limit to how many times the users might be willing to watch the game of war ad.
CPI bids are influenced by supply and demand
The mobile advertising space is highly competitive which leads to complex market dynamics similar to the stock market. This means that bid prices are influenced by supply and demand. One example of that is the holiday season where advertisers double and triple their advertising budget the demand increases. The bid prices will inflate and will increase eCPMs in that season.