on August 16, 2022 (last modified on November 23, 2022) • 23 minute read
Left to its own devices, Facebook can empty your wallet pretty quickly. And with limited resources in terms of time and staff to focus on your Facebook ads strategy, the last thing you need is going over your budget and not seeing a good ROI.
So, if you’ve been wondering how to reduce your cost per thousand impressions (CPM), you’ve been thinking in the right direction.
Lowering your CPM means your cost per click, cost per lead, and cost per acquisition all typically go down as well. Simply put, you get more on less ad spend.
But, how do you lower the amount you invest? We reached out to over 25 ad experts to learn how they reduce their CPM. In this guide, we’ll share their best tips with you.
Let’s jump right in.
CPM (Cost per Mille, mille meaning thousand in Latin) is a metric used to measure the cost of 1,000 impressions on your ad. Impressions refer to the total number of times an ad is displayed to a user, be it on their social media feed, on a website, or in search engine results.
In this particular case, we’re focusing on Facebook, where you’re charged a specific amount of money for your ad to be shown to 1,000 people.
How much you will pay for 1,000 impressions depends on various factors, such as:
It’s vital to differentiate CPM from other common ad metrics with similar acronyms, like CPA or CPC.
CPA stands for Cost per Acquisition and shows how much money you need to spend for one conversion. CPC stands for Cost per Click and refers to how much you pay for each click on your ad. Tracking all these metrics together is valuable if you want to get accurate insights into your ad campaign performance.
Related: Facebook CPC: 17 Ways to Reduce Your Advertising Costs on Facebook
CPM is a relevant metric for different types of marketing campaigns because your main campaign goal isn’t always to generate as many conversions as possible.
Sometimes, you will create broad campaigns with the goal to reach as many new target audiences as possible and raise awareness about your brand. In this case, measuring and optimizing the campaign for impressions will be far more valuable than optimizing your spend for clicks.
For example, new brands that are just getting their name out there, or brands with new products or services, might aim for exposure more often than direct sales or signups.
At the same time, focusing on CPM will allow you to identify the most effective marketing channel for future advertising efforts, as you may discover that your Facebook ads CPM is lower than, for example, your search engine CPM.
To check your Facebook ads CPM in Facebook Ads Manager, complete the following steps:
Open your Ads Manager account.
Click to open the Ads tab in the top right corner.
Select the desired date range you want to check CPM for. Then proceed to choose Performance and Clicks in the Columns drop-down menu.
Scroll to the right to find the CPM column: there you’ll see how much 1,000 impressions cost you for the selected ad.
In case you don’t immediately see the CPM column, click on the blue plus sign on the right and then Customize columns.
Select the Performance tab on the left and scroll down to find the Cost section, where you can choose to display CPM (Cost per 1,000 impressions) in your ads manager.
Over the last two years, the cost per thousand impressions has increased significantly across platforms. For example, Skai reported a 41% increase in CPM compared to the same period of the previous year in 2021.
The costs increased similarly on Facebook. Here’s how you can calculate your CPM:
Facebook looks at the amount you spend on your ad campaign and the number of impressions your ads get. The formula is simple: Your total ad spend divided by the impressions received, then multiplied by 1000.
For instance, if you invest $75 on a campaign and you get 10,000 impressions, your CPM will be $7.5.
A burning question related to CPM is undoubtedly this—what is a good CPM for Facebook ads? There’s no universal answer, as the Facebook average CPM varies by industry and other factors.
According to Databox’s own Benchmark data, Facebook Ads CPM is $7.20 (monthly).
This benchmark was calculated from anonymized data from close to 400 companies. If you want to benchmark your paid ads performance, including Reach frequency, clicks, CTR, CPC, and more, against other companies like yours, join the Benchmark Group for free.
*Important note: Databox Benchmark Groups show median values. The median is calculated by taking the “middle” value, the value for which half of the observations are larger and half are smaller. The average is calculated by adding up all of the individual values and dividing this total by the number of observations. While both are measures of central tendency, when there is a possibility of extreme values, the median is generally the better measure to use.
To get helpful info about the state of Facebook Ads performance in 2021 (and beyond), you can also check out our original report.
Viewing benchmark data can be enlightening, but seeing where your company’s efforts rank against those benchmarks can be game-changing.
Browse Databox’s open Benchmark Groups and join ones relevant to your business to get free and instant performance benchmarks.
As we mentioned earlier, you need to take multiple factors into account when looking for the culprit for a high CPM or ways to optimize it. Here’s a breakdown of six factors that have the most impact on your Facebook ads CPM.
Audience size and location can impact your CPM, as well as your competition’s choices. For example, if your competitors are targeting the same audience at the same time, your advertising costs will be higher.
Ad costs can change in a matter of hours. There are also other time factors to consider, like seasonality. For example, winter holidays usually cause fluctuations in CPM: November and December are when most brands run ads and the competition increases, so the CPM does too. As ad campaigns start to slow down in January, CPM typically declines.
As mentioned in one of the previous sections, brand awareness campaigns usually have a lower CPM compared to those aimed at conversions. Learn how to set Facebook Ad objectives according to your goals here.
Manual and automatic bidding strategies both have their advantages, depending on your desired business outcome. Automated bidding might make sense when you want to make the most out of your budget, but it can also mean a higher CPM. Facebook offers both bidding options, so it’s up to you to choose one based on your goals and priorities.
Related: Cost Cap vs. Bid Cap: Which One Will Supercharge Your Facebook Ad Campaign?
Some industries simply have more (or stronger) competitors and there’s little you can do about it. For example, insurance and finances are two very expensive industries when it comes to CPM (and other ad metrics, like CPA or CPC). The lowest costs can be found in industries like foods and drinks, or pets and animals.
Business benchmarks are a valuable management tool that can help you set your strategy and business goals, and have confidence that you’re on the right track.
However, that doesn’t mean that you should pay an arm and a leg for them.
That’s why Databox is launching Benchmarks.
The cost? Nothing. For the first 10,000 who opt-in.
Wondering what will be included in Databox Benchmarks?
For starters, we can show you how your performance compares to others. Here’s what it might look like for the metric Churn rate…
You’ll be able to see:
And this is just a fraction of what you’ll get. With Databox Benchmarks, you will need only one spot to see how all of your teams stack up — marketing, sales, customer service, product development, finance, and more.
And much more…
Sounds like something you want to be a part of?
If you’re already a Databox user, just log in to your account and opt-in. If you’re not yet a Databox user, just sign up for a free account.
Split testing allows you to identify the most effective combination of ad elements like copy, visuals, placement, and audience. This way, you can identify what elements resonate with your target customers and use it to lower your CPM.
High CPM isn’t something you need to simply accept nor should it make you give up on Facebook ads. There are strategies to try and lower your ad costs. In 2022, these are the best practices that can help.
If you want to reduce your CPM, you should always keep an eye on your spending. The algorithm used in Facebook ads is designed to aim for maximum revenue, regardless of how much it costs. This means that, if you choose automatic bidding, your CPM can go up without providing you with satisfactory results in ROI.
Terry Tateossian of Socialfix’s maps out the entire plan for you:
Doing so “can potentially reduce your CPC by 10-15%” In fact, Tateossian digs further, “when running large scale campaigns this cost reduction can translate to hundreds of thousands of dollars per year.”
Want to make sure your Facebook ads are performing and trending in the right direction? There are several types of metrics you should track, from costs to campaign engagement to ad-level engagement, and so on.
Here are a few we’d recommend focusing on.
Tracking these metrics in Facebook Ads Manager can be overwhelming since the tool is not easy to navigate and the visualizations are quite limiting. It’s also a bit time-consuming to combine all the metrics you need in one view.
We’ve made this easier by building a plug-and-play Facebook Ads dashboard that takes your data and automatically visualizes the right metrics to give you an in-depth analysis of your ad performance.
With this Facebook Ads dashboard, you can quickly discover your most popular ads and see which campaigns have the highest ROI, including details such as:
You can easily set it up in just a few clicks – no coding required.
To set up the dashboard, follow these 3 simple steps:
Step 1: Get the template
Step 2: Connect your Facebook Ads account with Databox.
Step 3: Watch your dashboard populate in seconds.
Bombarding your audience with ads, even if they’re relevant, can even lead to spam reports, not to mention wasting your budget. When your ad is displayed to the same users, your frequency score will go up, as well as your ad costs as Facebook will deem your ad irrelevant to your chosen audience.
To keep your frequency score low, either put a cap on how often your ads can be displayed to your audience, or switch up different versions of visuals and copy used in the ad to avoid fatigue.
For example, Sanket Abhay Desai of ITS ONLINE MARKETING opts for the former:
“I optimize my campaigns for CPM by using Frequency Capping. I make sure that I do not overwhelm my audience with ads. I do that by implementing frequency capping, which ensures that I do not show my ads more than 3 times to a specific user. I also use optimized images and creative ad-sizes, so that I get maximum reach and coverage.”
Related: 15 Tips for a Lower Facebook Ad Frequency and Higher Relevance Score
Targeting a narrow audience usually brings better results than going for “as many as possible.”
When your audience is too broad, the ads may be irrelevant for too many people. A narrower target audience, determined not only by the gender and location, but also by job titles, interests, previous purchases, and other factors available in Facebook, gives you an opportunity to really nail down the group of people genuinely interested in your product or service.
VR Digital’s Larissa Banting confirms that “the more in-tune and tighter the connection with the audience, the lower the CPMs become. The best approach is to find an audience that is going to engage with your ads, rather than just look at them. Higher audience engagement will automatically increase the relevance score and decrease the CPM,” suggests Banting.
On the other hand, a narrow audience can also mean fewer impressions, which causes the CPM to increase. Here, audience options available on Facebook can help. To reach more people, leverage the available categories: core audiences, custom audiences, and lookalike audiences.
Related: What Is a Good Audience Size For Facebook Ads?
Ads that are relevant to your audience cost less, and Facebook prioritizes them—which means you’ll have a better reach. If you target a specific audience and make sure they don’t get spammed with your ad by monitoring the frequency, you can boost your relevance score and reduce ad costs.
You can check your ads’ relevance score under Relevance Diagnostics. Here, you’ll find evaluations of your ads compared to your competitors’ ads that target the same audience. The assessment is based on three criteria: perceived quality, engagement, and conversion rate.
Essentially, “the Ad Relevance rankings reflects how your ad is performing with those users that Facebook has delivered it to,” Tracy Hoeft from Amplify 11 clarifies. “Facebook wants to show the best ads to their users so they will give you a discount if you give their users something that they like.”
Retargeting is another effective way to reduce your CPM. Just like with custom audiences, you’ll be showing your ads to people who have already shown some interest in your product or service. These users are already “warm”, so they’re more likely to engage with your ads and finally convert.
To retarget interested users successfully, you can:
Related: 11 Facebook Retargeting Tips For Converting Warm Leads
To stop the user from scrolling away, your ad needs to be truly attention-grabbing, which is hard to achieve these days. The right creative format (video vs. image), compelling copy, and engaging features can help you get more eyeballs on your ads.
“It’s common nowadays for users to scroll right past posts that require a lot of reading, as they don’t have the patience or time to get interested. Users tend to also get more annoyed when they see an ad interrupting their feed as they scroll,” as Andrew Ruditser of MAXBURST notes.
“Although Facebook is one of the best platforms to use to promote your ads, it is difficult to catch user’s attention in the midst of many other brands trying to do the same thing.”
Ruditser suggests a fun solution: “Adding the popular choice of memes, gifs, or videos will grab that user’s attention and will give your post a higher chance of users engaging and wanting to read more. If more users engage with your post and share, your post will gain more impressions.”
In simple words, “it is important to get your post to stand out and make it more engaging compared to others.” Therefore, engaging features such as memes and videos are good starting points.
Related: Videos vs. Images: Which Drives More Engagement in Facebook Ads?
People trust online reviews, so social proof is a must on every website. But, social proof can also be extremely efficient as an ad campaign.
Your users’ comments, reviews, and testimonials can effectively generate trust among your target customers. Influencer campaigns and user-generated content can be just as successful, especially in remarketing campaigns, where they can be that one final push necessary for your target customers to convert.
A reason why social proof is so efficient in ad campaigns is also the fact that this type of ads uses your audience’s exact language to talk about your product. That makes these ads seem more genuine than regular ads. Users are often suspicious when presented with advertising materials, especially younger generations, so quotes extracted from case studies or social media reviews can help you build trust (and even brag a little without sounding self-absorbed!).
Split testing is what helps us understand which marketing strategies exactly are working and which are not. The good news is that you can A/B test virtually any aspect of your ad—from your target audience to your CTA copy.
Crissibeth Cooper of KNB Communications recommends you A/B test “different copy and visuals on the same audience.”
Cooper observes, “you will be able to see what type of content your audience responds to. Facebook wants each user to have a positive experience. If your ad is being enjoyed by your target (which Facebook will measure by things such as engagements), your CPM cost will be lower. Companies whose ads have low engagement will be charged more, because Facebook is more reticent to show ads that they know users dislike.”
If you are not sure where to start when it comes to testing your ads, according to our study on Facebook ads performance, both agencies and SMBs split test design more often than other elements.
According to ResumeLab’s Bart Turczynski, the goal of keeping your ad frequency under control is to “make sure that the same audiences aren’t seeing the ads multiple times a day.”
It’s a waste of money”, but also damaging for your “brand perception” in the eyes of your potential customers, Turczynski observes and shares another way to put your ads in the right place at the right time—and in front of the right audience. “Ensure that you set the hours for when your target audience is most active and present on the platform to maximize your ROI and lower the effective CPM.”
When you know your audience well, you will be able to identify the best time to run your ads for them. Are you targeting busy corporate workers? Lunchtime is probably when they’ll be scrolling through their social media. Set your ads to run at this time and your CPM will likely decline.
There’s no universal best timing since there are thousands of different audiences, so you’ll have to do some manual research to find what works for your target users. To do that, you can combine insights from Google Analytics and Facebook Analytics (if you have the Facebook Pixel installed) to see the time when most of your customers convert.
Related: 10 Clear Signs You Should Pause Your Facebook Campaign
A call-to-action helps direct the ad viewers to what they need to do after seeing your ad is crucial. Adding a compelling or intriguing CTA to your ads can help generate more engagement with your campaigns, which positively affects your relevance score and lowers your CPM.
CTA buttons are also a great element for split-testing. For example, you can test a simple “download the guide” CTA for a lead magnet for a more conversational and engaging “grab your guide now” and see how each ad performs.
Microcredit Summit’s Kimberly Porter shares her own experience: “One of the ways we’ve optimized our CPM for Facebook ads is to include a call to action. This seems like such a simple pivot for an ad, but it has really made a big difference on the number of people who engage with our ad. Selecting ‘Learn More’ or ‘Sign Up’ works best when promoting our content.”
The reason this works is simple: people sometimes need reminding. Porter adds, “I think sometimes people will just skim the post, so encouraging them to click a button helps them remember we are actually offering them useful information.”
Related: How to Write a Call to Action: Increase Your Conversions with 16 Proven Tips for Crafting CTAs
Databox lets you track your Facebook ads ROAS in a straightforward way, so you can quickly identify issues and react promptly before you waste your whole budget.
To get started, watch our data snack or go through the written recap below:
Here’s how to track and improve your ROAS with Databox.
Here’s what you can learn from this table.
As you can see, tracking CPM against other common Facebook ad metrics can give you powerful insight into your ad quality, targeting, and more, and help you use your budget more effectively.
For a successful ad campaign, it’s critical to understand its high-level costs and monitor performance on a daily basis. Your metrics can change quickly, so it’s vital to react promptly to avoid overspending and make sure your campaigns are efficient.
Is that easy? No. Especially when you’re overwhelmed by other tasks on your plate, your data is scattered all over the place, and you need hours to update your spreadsheets and charts with the latest information.
Databox offers a solution that helps you get the most out of every dollar you spend on Facebook ads. We can build a wide range of customizable dashboards where you can effortlessly analyze your Facebook advertising performance with streamlined overviews of every campaign, ad set, and individual ads. Easily monitor metrics like ROAS, CPC, CTR, CPM, conversion rates, and more, while comparing your numbers to the last week or month.
This is how easy it is to get started:
Ready to optimize your Facebook ads and make them worth your time? Start setting up your free account right away.
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