What is effective CPM (eCPM)?

Effective CPM (eCPM) is a metric that shows how much revenue an ad earns per 1,000 impressions, regardless of the buying model (CPC, CPA, etc.). It helps advertisers compare performance across different campaigns and platforms by translating all earnings into a common CPM benchmark. 

In the context of Catalog Ads, eCPM is especially useful when testing ad creatives. This is because it allows marketers to see which product-focused visuals or formats drive the most efficient return per impression, even when those ads aren’t bought on a CPM basis.

Why is eCPM important when running Catalog Ads?

Catalog Ads showcase a range of products to users based on factors like their browsing behaviour or interests by automatically pulling from your product catalog to serve personalised creatives. For e-commerce brands, this format is highly scalable and conversion-focused. 

eCPM solves the challenge of evaluating performance across multiple platforms, audiences, and objectives. It standardises performance and cost-efficiency, allowing you to understand how much you’re paying to reach your target audience.  

Which factors can impact your eCPM?

Audience 

Like with CPM, broad audiences may generate a lower eCPM, while niche audiences often have a higher eCPM. This is because of the availability of impressions, with broad audiences having less competition. 

Ad quality and relevance

Catalog Ads automatically pull from your feed. This means that elements like product image quality, pricing, and product titles can all impact performance as high-quality ads tend to generate more engagement, lowering your eCPM. 

Platform-specific algorithms 

Platform algorithms prioritise which content gets shown to more users. If your ad performs well, the algorithm pushes it further. More reach often leads to higher quality impressions and eCPMs.

Best practices for improving your eCPM

Enhance your product data

Adding rich product titles, descriptions, and better quality images will help to deliver more relevant ads which will generate higher engagement. It also helps ad platforms with keyword and audience targeting. 

Segment your product catalog

Use product sets, like top sellers, budget products, or new arrivals, to tailor ads to user intent. This enables more precise audience targeting and improves ad relevance. 

What’s more, it also lets you leverage high-demand periods like Black Friday and Valentine’s Day or prioritise high-margin or high-performing products. This way, you can allocate better ad spots to seasonal or luxury products which will likely maximise your revenue per impression. 

A/B test creatives 

When running Catalog Ads, use A/B testing to compare how different templates, formats, ad placements etc. impact the performance. This way, you can identify which elements deliver the best eCPM and combine these to create an ad that will likely perform even better.