Game Design, Tips and Advice

What is eCPM Decay and How to Keep Ad Revenue High

(1200x600) eCPM Decay

After weeks, months of hard work, you have finally completed your mobile game. Everything is set, the red ribbon is in place and you’re ready to release it into the wavy waters of the digital sea, hoping it succeeds, bringing you fame and fortune along the way.

You smash the ceremonial bottle of champagne against the computer you used to build the app, and you press “Publish”. Then, after a week of solid stats, this happens:

ecp decay

If you want to measure and visualize the eCPM decay for your app Check out SOOMLA Traceback – Ad LTV as a Service.

Learn More

What happened?

Your eCPM, your effective cost per mille, or how much money you really are making from the ads served in your app, is decaying hard. What can you do about it? You can either hold your head in your hands as you gasp in despair, or you can get to work, slowing down the eCPM decay and pulling the maximum out of your products. But before I explain the various strategies you can employ, let’s first clear out a few basics, like what CPM, eCPM and other acronyms are, in the first place.

What is eCPM?

eCPM is short for Effective Cost Per Mille, and it relates to actual advertising revenue generated for those 1,000 impressions. Even though it’s a relatively new term, it has quickly established itself as industry’s universal standard of measurement and is being used to compare how well campaigns are performing side-by-side. Here’s what the eCPM equation looks like:

ecpm-equation

Image courtesy of Appflood: http://appflood.com/blog/what-is-the-definition-of-ecpm

First thing you need to do when calculating eCPM is to divide your total advertising earnings with the total number of impressions you have been given by the advertiser. The number you get is the amount of money you earn for a single impression. However, as impressions are paid out for every thousand, you have to multiply that number by 1,000.

The final number is how much you are earning on average from the campaign.

If you’re still unclear what the difference between CPM and eCPM is, here it is in a single sentence: CPM is a pricing and reach metric, while eCPM is a performance metric.

eCPM is only part of the equation

However, don’t be tempted to measure the performance of your advertising campaign solely on the eCPM. A website with millions of visitors which ends up with lower eCPM can still earn you more money than a website with less visitors, but with a higher eCPM metric. Other parameters, such as how many people visit a particular site are equally important.

What is CPM?

In the world of mobile advertising, abbreviations such as CPM, CTR and CPC are very common. They usually revolve around online ads, how much people view them and click on them, and how much money advertisers and ad networks earn from people’s actions. CPM is short for Cost Per Mille, with Mille being Latin for thousand. So in the shortest possible definition, CPM is the price of a thousand advertisement impressions. Visitors don’t need to click on the ad for the publisher to be paid. They don’t even have to *see* the ad – if they load it, it counts as an impression.

So, for example, if a website charges $5 CPM, that means an advertiser must pay $5 for every 1,000 impressions its ad receives. The CPM is used as a reach and pricing metric, and should not be confused with eCPM.

What is eCPM decay?

As you monetize your mobile app or game and your ad network of choice starts serving ads to your users/players, sooner or later you will come to realize that your eCPM is slowly (or sometimes, drastically) declining. The trend is also called eCPM decay, and is something many developers and advertisers are struggling to control.

eCPM decay: your ad network starts serving ads to your users and your eCPM is slowly drastically… Click To Tweet

Why does eCPM decay occur?

Most will agree – eCPM decay is inevitable. There are many reasons to it – sometimes the advertiser will promote low-quality creatives and provide you with a few clicks and very few installs. Sometimes, your app or game will hand out too many ad impressions, thus driving eCPM down. User behavior is also something that should be looked at, as users are more inclined during the first few views.

eCPM decay - single network vs. ad mediation

Season to be (un)jolly

Be wary of the holiday season. As I’m writing this article, we’ve basically entered the Christmas holiday season, which is that time of year when consumers are most engaged with advertisers and the content they serve. During this time, the competition becomes fierce, and mobile ads and advertisers scramble to fill target inventory during this time. In the weeks following the holidays, a significant eCPM drop is nothing unusual to experience.

If you have decided to incorporate multiple ad networks into your game to serve ads, you might also be experiencing what’s called campaign overlap, which is also often a reason for eCPM decline.

What is campaign overlap?

chartboost-interstitialIf you are using multiple ad networks, they might be serving you the same ad, a problem called campaign overlap. Many of the ad networks are working with the same advertisers and, as you might have imagined, the best performing ads could be, and often are, the same for all of them.

A network might stop itself from serving the same ad multiple times, but it is highly unlikely for networks to coordinate between themselves, meaning you will still end up with the same ad served too many times.

Adam Ben-David, VP of Supply Side Platform from Supersonic, a mobile ads company, is aware of the issue and believes the best way to tackle it is through ad mediation: “Campaign overlap and the effort to avoid it is the fundamental reason why developers use Supersonic’s mediation platform. Our ‘weighted’ optimization ensures that only the most relevant content with the highest eCPMs are served from a developer’s various ad sources, ensuring maximum ad revenue and user engagement,” he said.

He did, however, stress that sometimes repeating an ad doesn’t lead to lower engagement. Sometimes it can be quite the opposite: “Serving the same ad creative repetitively does not necessarily lead to lower engagement, perhaps the opposite, as it often takes several attempts to warm the user up before he or she engages at all.”

Slowing down eCPM decay

There is no escape from eCPM decay, that’s for certain. You can either throw your app into the digital wild and watch as it struggles for breath, or you can develop a plan and a strategy to make sure you get the maximum out of your product. Easing the effects of eCPM decay is absolutely doable and definitely something you should look into. There are a couple of things you can do in that respect: strategize on placement and timing; limit ad frequency; set up proper eCPM floors and be uncompromising in terms of minimising cost.

Slow down eCPM decay by: strategizing placement, limit ad frequency and set up proper eCPM floors. Click To Tweet

Keep in mind that these tips are not meant to be used all at once – the things you do to optimize your eCPM depend mostly on the product you have and its audience. Game genre and user engagement will have an impact on the eCPM decay. Sometimes, for example, limiting ad frequency won’t have as big of an impact as setting up proper eCPM floors. For that reason, you should think your strategy through for each individual product and set up a plan accordingly.

Placement

Think about your product: how much space does it have for an ad? Does the ad appear too often, in too many places? Is it hindering user experience? If that is the case, you can end up destroying your own produbreak prisonct, so be careful about where you place your ads. Games that offer short-length levels (a few minutes) often serve ads only after the player has finished a session, while others opt for rewarded video ads, which have proven to be extremely effective in terms of user engagement.

Limiting ad frequency

Timing is also of the utmost importance: if the ads appear at the most inconvenient moments (during the game, at the pause menu, etc.) not only will the user engagement drop, but the risk of players abandoning the app altogether rises. Pay close attention to how often the ads appear, and if you’re getting a campaign overlap.

Setting up CPM floors

When monetizing your app or mobile game, at one point you will also be asked to set up a minimum CPM, also known as the CPM floor. The CPM floor is the minimum acceptable CPM at an ad unit level. It represents the lowest possible price at which a bidder can win an impression on your app or game.

This is also a very important metric and should be treated as such. Setting up a low CPM floor, a high one, or simply trying to match it with the eCPM can all have different consequences on your monetization. A low-cost strategy might push you to later impressions, while a high one might have you ending up with significant decay beyond the second and third impression. Sometimes, matching the CPM floor with eCPM might have unwanted consequences, as you might appear too expensive for CPM advertisers. By matching these two metrics, you could cut out a lot of cleared impressions in the lower end, hurting your impressions count and revenue. So which of the three roads should you take? As with everything else, it depends on your product and your audience, but my general tip would be to be uncompromising in terms of minimising cost. In other words – avoid low-cost strategies and go for a more valuable first impression.

Avoid low-cost strategies and go for a more valuable first impression. Click To Tweet

Here’s why: opting for a low-cost strategy, you will most likely be pushed towards later impressions. Those are quite often only viewed by reward farmers – players watching ads only to gain something in return (in-game currency or something similar).

There’s no stopping eCPM decay…

…but that doesn’t mean you should let it freefall. You can use the tips written above to create a controlled, sustained fall which will maximize the monetization of your app. You can do that through proper strategy and careful planning on how the ads will be served in your product.

Proper placement and timing of the ads are crucial, as well as well-balanced CPM floors to reach those lower-paying gigs and still perform nicely. Try avoiding low-budget strategies and unique rewards obtainable only through ads, as you will most likely end up with reward farmers that are a true eCPM killer.

Feel free to share:

Related Posts

6 Comments

  1. nevo

    December 5, 2015 at 3:21 pm

    nice article, especially your point about it being linked to cohorts of users. the question shouldnt be about eCPM but rather about total revenue. I can have super high eCPM by reducing the number of impressions i release, but have much lower actual revenues (which is the outcome i care about). also, as eCPMs are definately cohort linked (i.e. a user will click less the longer he is on unless you get dramatically different adverts/campaigns, especially ovr a short lifecycle) – it is important to look at a LTV measure for users and understand how to maximise that beyond eCPM.

    Reply

    • Gur Dotan

      December 6, 2015 at 12:21 pm

      Great comment. Can you share which games you’ve experienced this with and which ad networks / mediation layers? It’s interesting to hear some real world examples.

      Reply

  2. […] graphs illustrate a dip in ad revenue after the holiday season during 2014, the pattern holds true year after year (same as we are seeing now, in 2015). The consumer and advertising frenzy of the holidays has to […]

    Reply

  3. Marfeel

    January 11, 2016 at 12:21 pm

    […] graphs illustrate a dip in ad revenue after the holiday season during 2014, the pattern holds true year after year and we are seeing similar trends during 2015’s Holiday Season. The consumer and advertising […]

    Reply

  4. […] Source : SOOMLA […]

    Reply

  5. john

    January 27, 2017 at 4:15 pm

    super interesting – THX
    have you ever tested the impact of DAU on eCPM seems to be the next big “unknown” in that formula to monetising via rewarded video.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Join 7362 other smart people who get email updates for free!

We don't spam!

Unsubscribe any time

Categories

More in Game Design, Tips and Advice
Game Review: Haberdashery – A Pleasant Surprise

'I love it when a plan comes together'. Those must have been the words of boys and girls in the...

Close