I have heard and seen that the eCPM drops with a higher number of ad impressions. Right now in my game, I show an interstitial ad everytime the user fails in the game (every few seconds). Will this help me get more revenue than it would if I show less ads (cause the eCPM would be higher with less ads)? Should I change my high frequency of ads? Will it make around the same as now?
You're eCPM will remain the same no matter how often you show your ads if your CTR (Clickthrough Rate) remains the same. Read this article here for a nice explanation of how eCPM is calculated. A good rule of thumb is, more impressions, better chance for more clicks, more clicks equal more revenue. eCPM is not the end all metric here. Your main concern should be user retention. If users are leaving your application due to the mass amount of ads then lowering your applications ad frequency may pay off in the long run.