Deep Dive: Understanding RPM

When your revenue depends on Display Ads, you track two very important metrics to measure the success (or failure) of your efforts: traffic and RPM.

The first one, traffic, is a measure of how well you can attract visitors. The second, RPM or Revenue Per Mille, tells you the value of each visit. It’s an essential indicator that has many facets.

In this article, I’ll explain what RPM is, what it isn’t, what factors can be in your control, and which ones are completely outside of it.

What Is RPM?

RPM, or Revenue Per Mille is defined as the total revenue (from Advertising) divided by the total traffic.

There’s already some confusion in this definition as some advertising company put forward an RPM per Session, while other show it per Pageview.

Let’s take an example. If you have a website that makes $2,000 in a month, and you have a total traffic of 100,000 sessions generating 130,000 pageviews, it’s calculated as follow:

• Session RPM is: ($2,000 / 100,000) x 1,000 = $20
• Pageview RPM is ($2,000 / 130,000) x 1,000 = $15.4

RPM = 1000 × Σ (Ad Revenue) / Σ (pageviews [or sessions])

These values can be aggregated, sliced, and diced across any dimension of interest. As a result, you can (most likely) find out your Organic RPM, Facebook RPM, RPM per date, but also more site-specific metrics like RPM per WordPress Category, RPM per Author, etc.

The revenue that each pageview makes is itself the sum of the revenue displayed on all the ad units (an ad unit is a block where ads get displayed) on the page.

What Factors Influence The RPM?

The RPM value is a calculation, the sum of the revenue of each individual ad unit on a page aggregated over all the pages for a period of time. The factors influencing this value are multiple.

There are external factors – things you cannot influence – and internal factors – things you can control. On top of that, there are factors that are directly related to the ad agency you use and finally, there are factors that are inherent to the traffic you receive.

External Factors

An ad displayed on your site is essentially someone deciding to spend some money to outbid others and be displayed for a few seconds. They do that because they believe it will encourage a click to buy something, promote their brand, influence the user’s shopping behaviours, etc.

This depends on:

• Economic Confidence: Advertisers are ready to spend a lot more when the global and local economy goes well. The post-pandemic years of 2021 and 2022 saw a massive increase in RPM because shoppers were spending a lot online, fueling confidence. In contrast, the early stages of the pandemic and its huge uncertainty saw RPM plummet to their lowest levels ever. Blog owners often saw their RPM divided by 4 to 6 in just a week. The better the overall economy, the higher the RPMs.
• Seasonality: Because shoppers tend to spend seasonally, RPMs follow the same trend. November and December are the months with the highest volume or sales, so it’s no surprise they typically have the best RPMs. On top of yearly seasonality, there are special events such as Christmas, Thanksgiving, Black Friday where advertisers are keen to spend more. And finally, within a week itself, RPMs tend to be slightly higher during the weekend.
• Budget Constraints: Most companies that purchase ads tend to have specific marketing budgets that are reviewed annually, quarterly, and monthly. This has always led to increased RPM at the end of the month, quarter, and year because most tend to keep some budget at hand.

Internal Factors

While you can’t influence how much money an advertiser will spend on a single ad displayed in an ad unit, you can change how they display.

These internal factors influencing RPM are:

• Quantity of Ads Units: The more ads are displayed on the page, the more likely each of them will bring revenue. So, theoretically, increasing the number of ad units will increase the revenue on each pageview, increasing the RPM. However, this is a double-edged sword as too many ads, while seemingly increasing RPM can lead to lower revenue overall, read below.
• Time On Page: Most advertising companies set up ad units to display rotating ads. As a result, the more time a user stays on a page, the more ads are served the more revenue each ad unit makes. This means that adding content like video and useful text that users actually spend time on is an excellent way of increasing your page RPM.
• Advertiser-Friendly Content: While all content can motivate a reader to stay on the page, some content make advertisers run away. There are many topics that affect brand safety negatively. So avoid anything dealing with such topics.

Agency Factors

While external factors are completely out of your control and you can heavily influence internal factors, there are some other ones that are in between.

You can indirectly influence these factors, mostly via your ad agency.

• Ad Quality: Some ad networks are ready to display any kind of ad, including for very dubious advertisers or ads that don’t meet basic safety guidelines. They tend to do that because they struggle to find better, higher paying options. On the other hand, premium advertising companies will have better deals with top-quality brands. These ads would typically be high-quality videos or stills that therefore are more likely to induce clicks.
  So a better ad quality leads to higher RPM.
• Ad Types: Not all types of ad formats have the same RPM. Ads placed in front of a video tend to bring the best revenue. In contrast, stills bring far less. Animated and video ads (not the same as ads-before video) are in between.
• Ad Placement: Where each ad unit is placed tend to have a massive impact on its revenue and therefore on the page RPM. Placements such as sticky footer, in main content (such as recipe card for recipe websites) tend to score the highest.

Traffic Factors

While internal, external, and agency factors directly influence your RPM, Traffic Factors are more of a strong correlation and they are absolutely not something you can influence.

But you’ll see that you can still leverage them!

• Audience Age: There’s a direct correlation between your audience’s age distribution and your RPM. This is not a surprise as older generations have a much higher purchasing power than people in their 20s. While you can change that directly, you can focus on targeting an older audience. Find what they like, and go for it!
• Audience Location: The online world is heavily polarized towards North America. US advertisers spend about the same as the 20 following countries online (source). So if your audience is in the USA, you will get much higher RPMs than a similar audience from any other country. A corollary of this is that the RPM of English content will massively outperform any other language. You can influence this by writing content for the North American market.
• Device: You can have a lot more and bigger ads displayed on a 25-inch screen on a desktop computer than on a 5-inch mobile phone. As a result, desktop traffic tends to have a much higher RPM than mobile traffic.
  Within the same form factors, there are also socio-economic variations. Apple iOS users tends to be wealthier (or higher spender) than people on Android devices. So all other things being equal (i.e. for people using the very same browser), iOS users will bring higher RPMs.
• Browser: There are massive RPM variations between browsers for technical and socio-economic reasons.
  Technically, some browsers like Apple’s Safari block third-party cookies, making it far more difficult for advertisers to identify the user and targeting them with tailored ads. This leads to much lower RPMs.
  Some users also visit pages on embedded browsers (such as the one in the Instagram App). These browsers tend to be isolate the user from the rest of their footprints left on other browsers. As a result, they also have lower RPMs.
  Some browsers (DuckDuckGo, Opera) also tend to be favored by different, sometimes less wealthy population, also leading to lower RPMs.
• Channel: Where your traffic comes from significantly correlates with RPM variations. This is again linked to technical, circumstantial, or socio-economic aspects.
  Traffic coming from Google Discover tends to have the best RPMs because it’s highly targeted to people who most likely will like the content presented to them, and it’s also entirely in Google’s browser ecosystem, which (still) allows third-party cookies.
  Traffic from sources such as your Email list or Pinterest tends to be very engaged in your content. They come for a reason, often know you already, and know what they are expecting. As a result, they stay for longer, leading to higher RPMs.
  Traffic coming from Facebook or Google Search tends to be very good RPMs because the users are actively looking for something.
  Instagram traffic is at the bottom of the RPM scale because it’s using a locked-down browser, the audience tends to be younger (see above), and click on links more out of curiosity than for a long read.

RPM Myths

Because of its absolute central effect on a site owner’s revenue, RPM is very often misinterpreted.

All you need is a few hours on a big advertiser’s (Raptive, Mediavine) Facebook group or on Reddit to see that there is a huge amount of confusion.

Myth 1: RPM is some kind of inherent property assigned to each page.

This is one of the most frequent confusion with RPM. Many – and when I say many, I mean a huge amount of people – talk about RPM as if it was a number that someone attributes to a page somewhat arbitrarily.

RPM is not a page property, it’s just a measure.

Myth 2: Chasing better RPM is the only goal

Revenue and RPM follows a Laffer curve, similar to how increasing a tax rate only increase tax revenue to a point of inflection beyond which the increased tax become counter-productive.

In other words, there’s a point at which increasing things like Ad Density (and therefore RPM) reduces overall revenue because it increases bounce rate, reduces returns rate, and can even affect Google ranking, reducing traffic. All while increasing the RPM.

Improving RPMs

Improving your RPM can be done relatively easily if you have never spent any effort towards it. It’s a combination of:

• Improving the user experience to improve ad viewability.
• Improving the content as high quality content increases time on page
• Optimizing the ads

Frequently Asked Questions