You might be thinking of how Google Adsense calculates different tracking attributes like CTR, eCPM, CPC, RPM and the most important ESTIMATED EARNINGS. These Adsense formulae have always been confusing because on different sources, different formulae are given. In fact they are inter-related; only the way of expression is different.
There are no hard and fast formulae for CPC and Estimated Earnings.
CPC (cost per click):
It is simply the bid rate set by the advertiser as cost of one click for publisher. CPC ranges from $0.01 --- $60 (but in some rare cases). It actually depends on the keywords you are targeting in your website/blog. Some keywords may give you only $0.01 whereas some be worth $60. For ease please have a look at Lists of high paying keywords here.
Estimated earnings:
Being very simple, Adsense calculates earnings by CPC multiplied by no of clicks.
Estimated earnings = CPC* no of clicks
Example:
Estimated earnings = $1.00 * 10 = $10
But remember as the CPC is not same for every ad so don’t try to calculate earnings by multiplying average CPC with number of clicks.
CTR (click through rate):
CTR gives the relation between number of clicks and page impressions. CTR is actually the number of clicks per 100 impressions.
CTR = (no of clicks/page impressions)*100
Example:
CTR = (50/1000)*100 = 5%
eCPM (effective CPM):
eCPM is a great way to monitor the performance of different ad units. eCPM is helpful while experimenting the various ad units and for effective comparison. It is just an estimate for your future earnings. For instance, you get 10 clicks per 100 impressions and your earnings are $2. Then for 1000 impressions, you can expect to have 1000 clicks and earn $20.
eCPM= (total earnings/total impressions)*1000
Example:
Now let’s see how we can compare two ad units. Suppose you have a Wide Skyscraper unit and a Large Rectangle unit.
Now if Sky Scrapper unit earns you $2.46 over 489 impressions then its eCPM would be:
eCPM= ($2.46/489)*1000= $5.03
And if Large Rectangle unit earns you $1.49 over 345 impressions then its eCPM would be:
eCPM= ($1.49/345)*1000=$4.32
so it’s easier to see that Sky Scrapper unit will earn more than Large Rectangle unit per 1000 impressions. This information is also helpful in determining that placement of Sky Scrapper unit and the ads displayed in it are high paying.
Caution:
You are not paid for anything other than ad clicks. Your real Google Adsense earning is from ad clicks, rest everything is just an estimate or some predictions.
RPM (revenue per 1000 impressions):
It is the revenue per 1000 ad unit impressions. It does not represent how much you have actually earned. To me it’s very similar to eCPM. It just shows a scale how your account is going on. I wish I could remove it from my Google adsense account.
RPM = (estimated earnings/no of ad unit impressions) * 1000
Example:
RPM= ($50/10000)*1000 = $5
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