After the digital revolution, social media has conquered the world. With over 4.26 billion social media users, its popularity keeps increasing daily. Imagine how much visibility your ads will get through social media!
Paid advertising is a concept that social media has amplified. With a bulk amount of the global population present and active on social media, it only makes sense that you promote your business on it.
Facebook still sits on the throne as the most-used social media platform globally, outranking even Instagram. With almost 3 billion users, Facebook ads reach over 72% of these users. It’s the best platform where you can display ads and give more exposure to your business.
Through time and use, Facebook has proven that it is an effective tool for advertisers due to its satisfactory Return On Investment (ROI). Companies spend a staggering amount on Facebook ads.
Since it is such a huge platform, with a global reach, it might consume your budget and you might end up spending more than you had anticipated. Fortunately, there is a solution to your budget problems.
This blog provides helpful tips for reducing Facebook ad Cost Per Mille (CPM) and also includes why it is important to have a low CPM. The blog also shows how a reduced CPM will improve your chances of conversion.
You will also understand the method for calculating CPM for Facebook ads, and the factors impacting your Facebook ads’ CPM. To know more about these, read on!
Facebook Ad CPM is an abbreviation for Cost Per Mille or Cost Per 1000 Impressions. This is the amount that you pay Facebook to display your ad to thousand people. In Latin, Mille means thousand. M also stands for 1000 in Roman numerals.
Facebook is a platform that provides you with a place to display your ad that it shows to several people. It charges you based on the 1000 times that your ad was seen. Advertisers have to bid an amount to place your ad. This is the Facebook ad CPM.
When your ad is displayed, the impressions are not equivalent to the reach of the ad. Not all the impressions received on your ad are unique. A user can view your ad multiple times, and every time he does, it will be counted as an impression.
On the other hand, reach means the number of views that your ad captured from unique users. Sometimes Facebook will show that your ad has 5000 impressions out of which 3000 might be the reach while other 2000 could be the same users.
Along with CPM, there are other metrics like Cost Per Result, Ad Clicks, Result Rate, Spend, and more that marketers need to measure while running your Facebook ads. Check out our metricbase page to learn more about Facebook Ad metrics.
There is an easy formula to calculate the CPM metric. It is the total amount that you have spent on your ad campaign, divided by the total number of impressions, and multiplied by 1000.
Cost Per Mille (CPM) = Total Amount Spent / Number of Impressions x 1000
Let’s look at an example. If you spent $40 for an ad campaign that helped you garner 5000 impressions, then your CPM is $8.
An ad campaign with a high Facebook CPM does not always result in the best outcome. It can completely consume your budget and make you pay extra than your anticipation.
It is crucial to take precautions to reduce your CPM to get better results on your campaigns. When your CPM is low, your cost per click or CPC is also low. Thus, the total cost to generate leads is also low.
A low Facebook ad CPM will be beneficial for your total budget. It is a positive thing for all businesses and everyone should opt for it.
Various factors impact your Facebook Ad CPM. Let us understand the two most crucial factors.
Your industry, target audience, audience size, campaign objective, placement, and seasonality all fall under the demand and supply factor.
The Facebook CPM varies based on your industry type. Whether you are keeping your campaign objective in mind while targeting your audience, considering the audience size, and the placement, it also impacts the CPM.
Seasonality impacts the cost of Facebook ads due to all the competitors bidding for the ad placement. The CPM spikes up, especially during the holiday season when the demand and supply are both high.
The Facebook Customer Feedback Score is the driving factor that impacts the CPM.
If a user sees your ad and makes a purchase, Facebook asks the customer for post-ad feedback. This feedback is then assessed as a score. Based on the score, Facebook charges your ad.
A low feedback score leads to a higher CPM, while a high feedback score leads to a lower CPM.
Along with the factors that impact your CPM, some precautions can be taken to reduce CPM well in advance. As the importance of reducing CPM has already been discussed, it is beneficial to practice it.
The following tips will help you in reducing your Facebook CPM and experience budget-friendly ad campaigns. Let’s go through each of them in detail and understand them.
You must target the audience that is relevant to your Facebook ad. Marketers should know the exact criteria when choosing their audience. When you narrow down your ad to the relevant audience, your ad reaches the right users.
When you are placing your ad on Facebook, there is a lot of competition from other brands who are also bidding to target the same audience. But choosing the relevant audience will give more visibility to your ad than the competitors.
The relevant audience will be able to relate to your ad. This will generate a higher CTR. Facebook advertising charges you based on the relevancy of your ad. It will decrease the CPM if your ad is relevant to your target audience.
The CPM on Facebook is decided by the relevance score (between 1 to 10). A high relevance score means that your target audience is engaging with your ad. This leads to higher CTR and lower CPM. A low relevance score leads to a higher CPM.
Facebook has introduced a Relevance Diagnostic that consists of three important metrics. Quality Ranking, Engagement Rate Ranking, and Conversion Rate Ranking are the three metrics that impact the relevance score.
Related: Understand more about ad conversion and its importance and learn how you can improvise.
Thus, targeting the relevant audience provides a high relevance score that generates more traffic which leads to low Facebook CPM.
The place on a Facebook user’s feed, where your ad appears to the users, is called ad placement. Within the Facebook network, you can place your ad on four platforms: Facebook, Instagram, Audience Network, and Messenger.
Manual Placements and Automatic Placements are the two options you can choose from while placing your ad. If you choose the manual placements option, you restrict Facebook’s algorithm.
It is always recommended to choose automatic placements as the algorithm does the work for you. It enables the ad to appear on all platforms to understand where your ad serves its best purpose.
With the data from the placement, it optimizes your ad and finds users who are prone to conversion. These targeting conditions lower your Facebook CPM and increase the CTR.
You can display your Facebook ads in different formats. Here are the various formats that brands can use.
Videos have the ability to grab attention quickly. Compared to image ads, Facebook provides more space for video ads. But it is challenging to make video content, so advertisers fail to utilise the video ad space that is provided.
Facebook has a higher demand for video ad placement but the supply of video ads by advertisers is low. Changing your ad format to a video ad will increase engagement, resulting in a budget-friendly CPM.
The engagement rate is an important factor that affects the CPM. Facebook has a burst of content while the attention span of users has decreased. Your ads need to be unique with compelling copy and images to hook the users.
Unique image formats with gripping copy and call to action make a large difference in the engagement rate. You can take inspiration from the unique elements present in an already better-performing ad to make your ad trendy.
Sometimes, users might not be pleased to see an ad blocking their feed frequently. But including trending memes or gifs in your ad will hook the users and improve your engagement rate. This will reduce your CPM.
Retargeting or remarketing is another effective tip to reduce Facebook CPM. It means that you target your ad towards users who have already shown their interest by visiting your website but have not yet purchased anything.
Having already visited your website, they are also known as ‘warm’ users that you want to turn into customers. As they have already landed on your website before, there is a high chance that they will engage with your ad and finally convert.
To retarget interested users, install Facebook pixel on your website. It helps you in tracking the behaviour of the users on your website. It also shows you minute details like a customer added a product to their cart but did not purchase it.
This data, also helps you to create custom audiences according to your Facebook ad. These user-specific ads will bring better conversion rates with lower CPM.
But it is important that you try retargeting warm users within 30 days of their visit to your website. It is better to remind these warm users about your brand sooner to convert them into paying customers.
Facebook has a feature called automated rules that you can create. This feature helps advertisers automatically check your ad campaigns, ad sets, and individual ads. It notifies you whenever there are any changes.
Automated rules help you to cut down the time and manual labour required to manage the ads. It also helps you to manage multiple ads that are running together.
These automated rules assist you in discontinuing underperforming ads and also managing your bids to generate more revenue for your business. It also helps to reduce your budget if your ad reaches its frequency limit.
Facebook ad frequency tells you about the average number of times your ad was displayed to a person within your target audience.
Total Impressions / Total Reach = Frequency
Users might not engage with your ad if you constantly bombard them with it. They might even report it as spam or hide it. This will decrease your CTR and increase your CPM. Hence, you must monitor how the ad frequency is impacting users.
Try to keep a low-frequency score for acquisition campaigns. To maintain a low-frequency score, set up a frequency cap on automated rules to track how often your ad will be displayed to users.
The frequency cap automatically limits your ad frequency. It also reduces your budget if your ad reaches its frequency limit. You can also add a frequency column in the Facebook Ads Manager.
Retargeting campaigns might face audience fatigue if you constantly display your ad and the audience shows no interest. This will affect your relevance score and increase your Facebook CPM. So, it’s important to monitor your ad frequency.
A higher budget does not necessarily mean a higher Return On Ad Spend (ROAS). It is crucial that you set up an economical budget for your campaigns and avoid overspending.
No matter the cost, the algorithm behind Facebook ads is designed to focus on maximising revenue. When you choose the automatic bidding strategy, your Facebook CPM might spike up without giving you satisfactory ROAS.
If you want to lower your Facebook CPM, it is recommended to always watch over your spending and be economical with your budget.
The main aim of your ad campaigns should be based on brand awareness, ad consideration, and conversion. All these factors have an impact on your Facebook CPM and decide whether it is high or low.
Traffic keeps fluctuating on Facebook and trends keep changing constantly. What turned your ad campaigns successful yesterday might not do the same in a few days. This needs to be tracked.
Due to the fluctuations and changes, the performance of your campaign will also change. It is important to learn about these performance changes to monitor the metrics.
Monitoring the metrics regularly will give you a perspective on how you need to adjust your campaign to increase CTR. To study the ad performance you must be aware of the goal of the campaign and then the key performance indicators (KPI).
The KPIs include:
Adjusting your campaigns according to these metrics will help in reducing your Facebook CPM.
To wrap it up, you need to be aware that CPM affects your total Facebook ad cost. Keeping it low is always better and beneficial. It is important to reduce your CPM for budget-friendly ad campaigns with more conversions and a higher ROAS.
Out of all the factors that impact your CPM, supply and demand, accompanied by user experience are the two most important ones.
Under supply and demand, your industry type will affect your CPM. You should also focus on your target audience, audience size, and ad placement which will all impact the ad cost. Focus should also be on your campaign objective and seasonality.
The Facebook Customer Feedback Score provides information about the user experience. It is collected from users and you have more control over it. Aim to keep your feedback score high as it directly affects your CPM.
Targeting the relevant audience, optimising by choosing automatic ad placement, experimenting with different ad formats and compelling copy, and setting a reasonable bid amount with an economical budget, will help in reducing CPM.
Along with this, using retargeting with automated Facebook rules, monitoring ad frequency, and adjusting your campaign according to the trends and KPIs will also be beneficial in reducing CPM.
Now that we have provided you with all these smart tips to reduce your Facebook ad CPM, you can start putting them into action. Study your ad campaigns and ensure that you present the users with an ad that drives them to convert.
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