What is cost per mile (CPM)?

Cost per mile (CPM) is a digital advertising metric that measures the cost per 1,000 ad impressions. Catalog Ads often run on a CPM model, where better creative quality and feed setup help you get more value from your impressions.

How do you calculate CPM?

To work out your CPM, you divide your total cost of the ad campaign by your total number of impressions. Then, you multiply this answer by 1,000.  

For example, if you spent $1,000 on your ad campaign that generated 20,000 impressions, your CPM is $50.   

Why is CPM important in e-commerce?

Your CPM gives you insight into how cost-effectively your ads are reaching your audience. In short, it tells you how much you’re paying to be seen, allowing you to compare the cost of exposure across channels. 

As it focuses solely on visibility and reach, it’s ideal for top-of-funnel (TOFU) ads aimed at building brand awareness or retargeting ads. You can use this number to estimate how much budget you need to reach a specific number of shoppers, making it easier to scale your Catalog Ads. 

Which factors can impact your CPM?

Audience 

If you’re targeting niche audiences, you can expect your CPM to be higher as there can be more competition. On the other hand, broad audiences typically generate a lower CPM because platforms have more opportunities to serve the ad.  As such, it’s best to avoid overly broad or very competitive audiences. 

Market demand

During peak seasons like Christmas or Black Friday, there are generally more advertisers competing for the same audience. As such, you can expect CPM to spike during these periods.  

Platform dynamics 

Most ad platforms use algorithms that reward high-quality, relevant ads with a lower CPM. If your ads generate a high engagement rate and align with user intent, you can expect to pay a lower CPM. 

Best practices in measuring CPM

Measure it in context

To determine if your ad campaigns are successful, you need to see your CPM alongside metrics like click-through rate (CTR), conversion rate, cost per acquisition ( CPA), and return on ad spend ( ROAS). For example, if your CPM is high, but your CTR is low, the result is wasted impressions. On the other hand, if your CPM, CTR, and conversion rate are low, your reach will be ineffective. You’ll end up paying for irrelevant impressions. 

Apply segmentation

When you’re measuring your CPM, it’s best to segment it according to:

• Campaign objective

• Audience

• Platform

• Country or region

• Creative type

This will help you to identify where your ad budget goes furthest. 

Track trends

New creatives and short-term/time-sensitive campaigns should be tracked daily, while the performance of always-on campaigns can be monitored about once a week. These schedules will help you to react early to rising costs linked to seasonal spikes, competition, ad fatigue, etc. 

Set benchmarks

It’s a good idea to build your own internal benchmarks where you record the average CPM by campaign type, platform, and audience. This data will help you to flag Catalog Ads that are underperforming and identify opportunities ideal for scaling.