What is a Good CPM in Facebook Ads and How to Lower It?
Have you ever wondered what CPM in Facebook Ads actually means and why it’s so important? If you’re looking to optimize your ad campaigns and make the most of your budget, understanding CPM is the first step. This blog will walk you through everything you need to know, from what CPM is to actionable tips!
What is CPM in Facebook Ads?
CPM, or Cost Per Thousand Impressions, is an important metric in Facebook Ads that indicates the cost of showing your ad 1,000 times to users. It allows advertisers to see how much they spend to reach their target audiences and plays an important part in budget preparation and evaluation of campaign performance.
In Facebook advertising, an impression counts each time a person's screen is graced by your advertisement. CPM is the cost of visibility, not an action like a click or conversion, and is therefore useful for campaigns focused on awareness or maximizing reach.
How to Calculate CPM in Facebook Ads?
To calculate CPM (Cost Per Thousand Impressions) in Facebook Ads, use the following formula:
For instance, if you spend $50 with 10,000 impressions for your ad, then that comes out to CPM as:
CPM = ($50 ÷ 10,000) × 1,000 = $5
This means you’re paying $5 for every 1,000 times your ad is shown.
Average CPM on Facebook Ads
Here are the latest benchmarks for average CPM rates by country and industry in 2024. These insights can help you better understand advertising costs across regions and sectors, allowing you to optimize your Facebook ad campaigns effectively. The data is sourced from reliable platforms such as Statista, and Hootsuite.
Average CPM Rates by Country
| Country | Average CPM (USD) |
|---|---|
| United Kingdom | 5.98 |
| Germany | 5.33 |
| United States | 4.29 |
| Canada | 14.03 |
| Australia | 11.04 |
| India | 2.70 |
| France | 4.75 |
| Brazil | 3.20 |
| Japan | 6.50 |
| Mexico | 3.90 |
Canada has the highest average CPM at $14.03, while India has the lowest at $2.70. This highlights the significant variation in ad costs depending on the target region.
Average CPM Rates by Industry
| Industry | Average CPM (USD) |
|---|---|
| Food and Drink | 10.36 |
| Clothing and Accessories | 08.01 |
| Health and Beauty | 8.77 |
| Arts and Entertainment | 3.66 |
| Technology | 5.45 |
| Real Estate | 7.89 |
| Automotive | 6.20 |
| Travel and Tourism | 9.50 |
| Education | 4.80 |
| Financial Services | 6.90 |
The Food and Drink industry has the highest average CPM at $10.36, while Arts and Entertainment records the lowest at $3.66, indicating the varying costs of advertising across sectors.
What is a Good CPM in Facebook Ads?
A good CPM on Facebook Ads usually falls in the range of $5-$15, depending on your industry, target audience, and campaign objectives.
For example, typical CPMs for e-commerce industries range from about $8-$12, and around $3-$6 for entertainment. Other factors that can have an impact on CPM include ad quality, relevance score, and geographic targeting.
In addition, targeting high-value audiences or running ads during peak seasons, like holidays, can result in higher CPM. Subsequently, to acquire a good CPM, optimize the quality of your ad, make audiences finer, and set CPM that aligns with your campaign goals for better ROAS in Facebook Ads.
Factors That Affect CPM in Facebook Ads
These ad quality factors mean that the better engagement and relevance scores reduce your CPM, while very low performance makes it go in the opposite direction.
- Audience targeting: Specialized or extra-cost crowds require extra, while mass audiences are less expensive.
- Competition: High seasons such as holidays drive up CPMs because of the increased number of advertisers.
- Ad Position: Premium ones (newsfeed, Instagram Stories) cost more compared to ordinary exposure positions.
- Geographical Location: Developed markets like in the U.S.A have more CPA than emerging ones.
- Seasonality: Times when shopping seasons such as the famous Black Friday spike CPM due to stiff competition in the market.
But, is a high CPM always bad?
Not necessarily. A high CPM can be worth it if it helps you reach a premium audience, secure better ad placements, or achieve strong engagement. It’s often justified during competitive seasons like Black Friday when potential returns are higher. Focus on the ROI rather than just the CPM to determine if the cost is worthwhile.
How to Lower CPM in Facebook Ads?
Having spent years working in the field of Facebook advertising, I’ve gained valuable insights into what truly works when it comes to lowering CPM. Below are the key strategies I’ve learned and refined over time to help you reduce costs and improve your ad performance.
1. Focus on High-Quality Creatives
Perhaps the greatest factor within my reach that has lowered CPM is enhancing ad creatives-eye-catching visuals and engaging ad copy naturally garner attention and thus higher engagement rates, something Facebook rewards with lower costs.
One of my campaigns had nothing but plain product images: CPM was as high as $12. Then I switched to a bright lifestyle video talking about how this product is used-and wham, it's down to $6. My advice: Don't settle-keep testing new styles, formats, and messages until you find what resonates.
2. Target the Right Audience
Effective targeting can be a game-changer. Narrowing your audience based on specific interests or behaviors, or using lookalike audiences, ensures your ads reach people who are genuinely interested.
For example, I recently launched a retargeted campaign for users coming to my site, and the CPM was 40% lower than when I did a broader targeting campaign. On the other side of the coin, though, I've also seen CPM rates get ridiculously high when targeting an audience that's just too small or niche.
3. Experiment with Bidding Strategies
Test both automatic and manual bidding strategies to find the one that delivers the best results. Most automatic bids for campaigns would do well with Facebook optimising for your specific objective. But only manual bidding helps make the best, maybe for the highest risk campaigns, as it gives control of the amount that you want to spend on impressions. You can adjust bids strategically for a better CPM relative to delivery of ads.
My takeaway? So, always start with automatic because it's simple, and switch to manual once you're sure how much you want to pay for every single impression. The advantage is particularly visible in competitive niches because that's where detail matters most.
4. Retarget Your Warm Audiences
Warm audiences such as website visitors or customers that have added products to their cards are likely to respond better to your ads. There is a greater chance that those audiences may interact with your ads, resulting in better relevance scores and lower costs.
Dynamic product ads are the best way to retarget customers; they will show users content tailored specifically for them based on earlier engagements.
5. Leverage Automatic Placements
Facebook’s automatic placements have consistently helped me reduce costs without much effort. While it is often easier for advertisers to have a placement on a site like newsfeed, I've often seen that leaving optimisation of placements to include ads on both Instagram and Messenger as well as Audience Network can produce better results in terms of cost-effective CPM.
While automatic placements guarantee that your advertisement is delivered in the most cost-efficient locations out of all the locations that still reach your target audience, follow the performance of each location separately and remove any continuously bad performers.
CPM vs. Other Facebook Ads Metrics
- CPM (Cost Per Thousand Impressions): The charge for showing the advertisement 1,000 times, mainly useful in awareness campaigns aiming for reach.
- CPC (Cost per click): The amount that you are charged for each user who clicks on the ad. This is the metric that an advertiser would use if they were focusing on the traffic coming to the website or landing page.
- CPA (Cost per Action): This gives the amount that you pay for acquiring an action that differs from an actual sale, for example, filling a consent form or signing up for a service.
The key difference is that CPM measures the number of views received, but CPA and CPC are performance-related metrics. In conjunction with your campaign strategy, choose the metric that aligns best with your desired outcome. Like using CPM for brand awareness, then using CPA for sales.
Final word
Optimizing CPM in Facebook Ads is key to running cost-effective campaigns and boosting your ROAS. Focus on great creatives, smart targeting, and the right strategies to lower costs and get better results. Remember, CPM is just one piece of the puzzle—always tie it back to your bigger campaign goals.
I hope that this guide helps you gain a deeper understanding of CPM and equips you with actionable insights to improve your Facebook Ads performance.
