As we all know, advertising on Facebook has become increasingly expensive for businesses of all sizes. But have you ever wondered what factors are driving up the cost per thousand impressions (CPMs) of Facebook ads?
It’s no secret that the cost per thousand impressions (CPM) has been fluctuating in recent times, and that has been rising consistently over the past years.
In this article, we’ll explore the five key factors that are influencing CPMs in Facebook Ads and provide some tips on how you can optimize your campaigns to get the most bang for your buck.
Before getting started it’s very important to underline one thing: High CPMs are not necessarily a bad thing for advertisers. This is because many times, seeing high CPMs on Facebook Ads means that we are targeting an audience that is highly valuable for us, which might turn out to give us higher conversion rates.
Think about the example displayed here, which is not uncommon in situations where we are targeting a highly valuable, yet expensive audience, such as during BFCM or when advertising to a remarketing segment.
Despite CPMs being higher in the first scenario, the audience is warmer, therefore we see higher CTRs and higher Conversion Rates.
This brings the average CPA being way much lower despite the higher CPM.
That’s the reason why it’s very important to look at the full picture, and not only at one single channel metric, which might be misleading.
Let’s jump now into looking at the main factors that can drive CPMs up and down on Facebook Ads:
Firstly, one of the biggest factors that affect CPMs is the level of competition. The more advertisers bidding on the same target audience, the higher the CPMs will be. This is because Facebook uses an auction system to determine which ads get shown to users, and the more competition there is for a particular audience, the more expensive it becomes to reach them.
Another key factor is the quality of your ad. Facebook’s algorithm rewards advertisers who create high-quality ads that are relevant to their target audience.
If your ad is poorly designed, lacks engagement, or is not relevant to your audience, Facebook will charge you more to reach that audience.
The timing of your ad is also important. CPMs tend to be higher during peak times when more advertisers are bidding for ad space. If you can target your ads to run during off-peak seasons, you may be able to get more impressions for less money.
On the other hand, during the holiday season, many advertisers compete for ad space, resulting in higher CPMs. For instance, if several companies want to advertise their holiday sales to consumers, the competition for ad space will increase, and the cost of reaching that audience will be higher. As a result, CPMs are generally higher during the holiday season.
Finally, the ad format you choose can also impact your CPMs. Certain formats, such as video ads, tend to be more expensive than others because they require more resources to produce and deliver.
If you’re on a tight budget, it may be worth considering simpler ad formats, such as still images or banners. Also here, it’s very important to evaluate the effectiveness of each ad format in terms of how well it drives the message that you want to communicate.