It’s entirely too easy to waste money when it comes to advertising on Facebook.
That’s why you need to pay close attention to your analytics and set up a campaign that minimizes your Facebook CPM.
In this article, we’ll go over some ways that you can lower your Facebook CPM and maximize your return with Facebook advertising.
What You’ll Learn:
- What Facebook CPM is
- How to lower it:
- Facebook CPM in 2020
Watch the below video from digital marketing expert John Lincoln to get a clear step-by-step explanation on how to reduce Facebook CPM before we take a deeper dive in the article:
What is Facebook CPM?
If you’re brand, spanking new to the digital marketing scene, you might be unfamiliar with the acronym “CPM.” It stands for “cost per 1,000 impressions.”
That’s right. The “M” in the acronym is really a Roman numeral.
Almost all online advertising platforms provide reports that show your CPM. It’s one of the ways to gauge the effectiveness of your campaign.
The lower your CPM, the better your ROI.
Now, let’s look at some ways to get that Facebook CPM as low as possible.
Use Facebook CPM’s to Perform Laser-Like Targeting
It’s a well-known principle of marketing that the bigger audience isn’t necessarily the best. That principle applies to online advertising as well.
Fortunately, Facebook allows you to define a very tight audience for your campaign. That allows you to appeal to a specific segment within your market.
You can target people based on demographics and interests. Within those two broad categories, you have plenty of options.
Take advantage of those features to run ads that will specifically appeal to a small group of people within your market. When you do that, you’ll lower your Facebook CPM.
After reading that last paragraph, you might be asking yourself: “How, exactly, does a targeted ad lower my Facebook ad costs?”
For the answer to that, we have to look at the relevance score.
Exercise More Control Over Your Budget
It is important to note that when Facebook is on automatic pilot and in control of your ad spend, it will run through the money quickly.
The algorithm was created to generate maximum revenue no matter how much money it costs.
To take control over your budget, counter-intuitively, you need to reduce the role CPM plays in your Facebook spending.
Luckily, there are a number of factors that can help you reduce your Facebook ad CPM. For one, you can improve your ad’s relevance score.
Split testing can also help you understand exactly what’s working and what’s appealing to your target audience. In addition to testing your audience, you can also split test different copy and visuals on the same audience.
You can also extend the scheduled run time of your marketing campaign so the algorithm is compelled to efficiently test and deliver your ads to the correct audience.
Understand Your Customers and Segments
To get the most bang for your buck, it will be essential to understand your customer segment in depth.
Segmentation is necessary in allowing you to target the most and least engaged customers at a more granular level.
To reduce your ad CPM, you need to nail down who your ads are intended for to maximize your results.
Some of the most common types of customer segmentation include demographic segmentation, geographic segmentation, behavioral segmentation, psychographic segmentation, and customer journey segmentation.
You can separate the segmentation process into three distinct phases:
- Establish a shared definition of the problem and solution to reduce the possibility of misunderstandings
- Start building your customer segments by gathering customer data and selecting the right segmentation variables that reflect meaningful customer differences.
- Drive internal adoption by sharing your new segments with relevant teams and stakeholders
A great way to target users online is by using Facebook’s Custom Audiences feature, which lets users connect with others who have a preexisting relationship with their business. With this tool, you can import email addresses for more effective retargeting.
Ultimately, you’ll want to dive deeply into the data of who your customers are and what they like about your product so you can position your ads and CPM for success.
The Higher The Relevance Score, The Lower Your Facebook CPM Will Be
A relevance score is a number between 1 and 10, with 10 being the best. It’s similar to Google’s Quality Score. As of August 2019, Facebook updated the relevance score to Relevance Diagnostics, though its purpose remains the same.
Facebook issues your ad a relevance score, or diagnostic, based on how much the company thinks your ad will appeal to the people that you’re targeting.
For example, let’s say you’re running an ad that’s selling skis to people who are interested in skiing and live near ski resorts. It’s safe to say that Facebook will probably give you a high relevance score for that ad.
On the other hand, if you just run that ad generically to people who live in Colorado, you’ll probably get a lower relevance score.
Here’s the most important thing to know about the relevance score: the higher it is, the more it can lower your Facebook CPM.
That’s exactly what Facebook says about the relevance diagnostics: “Ads that are more relevant cost less and see more results.”
So the bottom line is this: you can reduce your ad costs by running highly relevant ads that appeal to a segment within your market.
Let’s look at another example.
Bill runs an online saltwater tackle shop. He sells a variety of products to people all across the country.
Just recently, Bill bought a variety of outstanding bluefin tuna lures wholesale. He wants to sell the product to his customers.
However, not every saltwater fisherman is into offshore big game fishing. Further, the season for bluefin tuna fishing varies from region to region.
Bill knows that in January, North Carolina anglers will be looking for bluefin tuna off of Cape Lookout. He wants to run a Facebook ad campaign to target those fishermen.
In December, one month before the season begins, Bill launches his campaign. He targets people who live in eastern North Carolina and are offshore fishing enthusiasts.
Did you see what Bill did there? He created a very targeted campaign for a single product. That should keep his Facebook CPM low.
If Your Facebook CPM Drops, Keep An Eye On Your Frequency
The upside of a targeted audience is you’re likely to reach people interested in what you’re offering. The downside is that it can bump up your frequency.
The frequency is the number of times your ad is shown to the same person. It’s the opposite of a unique view.
Simply put, if your frequency gets high, you’re going to see your CPM drop.
Why? Because the same people are seeing your ad over and over again and aren’t doing anything.
Facebook will view that as a clue that your ad is irrelevant to your target audience. Your costs will go up accordingly.
Check your analytics. As a rule of thumb, make sure that your frequency stays below 3.
If it starts to creep up, change the ad, or discontinue it altogether.
Use Attention-Grabbing Images to Reduce Your Facebook CPM
Remember the underlying theme of the day: the more people you get to engage with your ad, on a percentage basis, the lower your CPM. One of the best ways to create interest in your ad is with a great image.
Let’s start with the size. Facebook recommends an image that’s 1,200 x 628 pixels. If you can’t get to that exact size, at least go with the ratio: 1.91:1.
Next, make sure that your image looks professional. Remember, that graphic is going to be the many people’s first impression of your company. Make sure it’s a positive impression.
Finally, make the image itself an attention-getter. Select something that will stand out from the standard assortment of images in a person’s newsfeed.
Remember to think outside of the box. You might be surprised at how well a bright, black-and-white image might perform with your audience.
If You Want To Decrease Your Facebook CPM Include Calls to Action
One of the best ways to get people to engage with your ad is with a CTA button. Fortunately, Facebook gives you plenty of options.
Here are some of the CTA text choices available:
- Shop Now
- Book Now
- Learn More
- Sign Up
Of those options, there’s some anecdotal evidence that “Learn More” generates the highest click-through rate (CTR). That makes sense at face value because the other options include spending money or joining a mail list.
So if you want to reduce your Facebook CPM, put a “Learn More” button on your ad.
Ads With Social Proof Get More Engagement
Yes, you can include social proof in your ad. In fact, you should do so.
Why? Because ads with social proof are more persuasive. That means they get more engagement and thus reduce your cost.
Use the “Text” part of your ad to include some bragging rights. Add a list of companies that use your product or service, mention a celebrity endorsement, or paste in a quotation about how much somebody loves what you’re offering.
Keep Your Ads In The News Feed
If you’re just getting started with Facebook advertising, it’s probably best if you run your ads only in the News Feed.
Why? Because that’s the part of Facebook that gets the most attention. It’s most likely that you’ll generate engagement for your ad there.
As a rule of thumb, the CTR for ads that run in the right-hand sidebar is very low. You run the risk of high costs if you go that route.
Also, you should include your ad in the mobile feed only if your ad and landing page are optimized for mobile. You don’t want to irritate mobile customers with a non-responsive website.
Remarketing Can Lower Your Facebook CPM
Thankfully, Facebook is on board with the remarketing strategy. That makes it easy to run ads that will generate high engagement.
If you’re unfamiliar with the concept of remarketing, also called retargeting, it’s a way to reach people online after they’ve already shown an interest in your brand.
For example, let’s say somebody visits your website today. The person left without buying anything.
As a good marketer, you know that sometimes it takes a few tries to get people to the lower end of the sales funnel. That’s why you’d like to reach that person with another marketing message.
You decide to run Facebook ads that are targeted towards people who’ve visited your website recently. As an incentive, the Facebook ad includes a discount code so that people who buy can save 10%.
The person who visited your website sees the ad is impressed with the discount, and visits your site to make a purchase. Ring the cash register!
Remarketing is a great way to “seal the deal” with people who’ve just been introduced to your brand.
Pro-tip: use a short retargeting window with Facebook ads. Although Facebook allows you to retarget people who’ve visited your website as long as 180 days ago, chances are pretty good that people who stopped by once about five months ago are no longer interested in what you’re offering.
Keep your retargeting window to something like 14 or 30 days. That way, you’ll put your marketing message in front of people who are still interested in what you’re selling.
If you want to use remarketing with Facebook, you’re going to need to include the Facebook pixel on your website. That’s a piece of code that records info about your visitors.
Fortunately, Facebook offers clear instructions about how you can include its pixel on your site.
Let Your Supporters Help
You can also enlist the aid of friends, colleagues, family members, and brand evangelists to help you reduce your high CPM on Facebook.
How so? By asking them to engage with your ad.
Remember: Facebook will often lower your ad cost when folks add comments, click links, or like the ad.
Reach out to people who support your business. Ask them to engage with your latest Facebook ad. Then, watch your CPM drop.
Pro-tip: it’s a good idea to get the engagement party started early. Facebook’s algorithm will detect that the ad is popular right out of the gate and start showing it to more people.
Your ad will get more exposure without the expense of a CPM increase. What’s not to love about that?
Make Sure You Split-Test Your Ads
Keep in mind that many of the tips discussed here will probably work for you. However, some might not.
That’s why you need to do split-testing.
If you’ve never heard of split-testing before, it’s a way to run two different versions of the same ad to the same targeted audience. After some time, you check your analytics to see which version performed best.
You’ll then direct all your resources to the ad that “won.”
Fortunately, Facebook makes it easy to do split-testing. Just create a couple of ads within an ad set and Facebook will divide your budget equally between them.
The great thing about split-testing is that it often falsifies assumptions. You might think that you have a great headline in your ad, but how do you really know that unless you compare it against something else?
Run split-tests with different headlines, images, text, and even call to action (CTA) buttons. Then, check your analytics later to see which option gives you the best bang for your buck.
For the Record: 10 Facts on Facebook CPM in 2020
- In January, Facebook CPMs were up 122% year-over-year. That was the highest year-over-year CPM jump in the past 14 months.
- In February, Facebook CPMs were up 77%. Some people think that’s because there are fewer ad impressions with the recent newsfeed changes. However, analysts can’t say for sure if that was the cause.
- The Facebook average CPM was $12.45.
- In the Fourth Quarter of last year, Facebook CPM increased 37% over the third quarter.
- In fact, Facebook showed a steady increase in CPM for every quarter during the last year. Here’s the full breakdown:
- Q1: $5.93
- Q2: $8.77
- Q3: $9.06
- Q4: $12.45
- Many advertisers don’t know that Facebook offers an advertising strategy called Optimized CPM (or oCPM). It’s a bid type that shows ads to people who are most likely to click on the call-to-action element.
- Here’s a breakdown of Facebook CPMs by industry:
- Consumer Packaged Goods: $5.40
- E-Commerce: $6.27
- Gaming: $3.09
- Retail: $6.33
- Travel: $7.94
- According to one study, the average CPM across all retailers is $5.24.
- Here’s a breakdown of Facebook CPMs based on advertising objective:
- Mobile app engagement: $11.38
- App install: $7.71
- Brand awareness: $1.58
- Conversions: $5.55
- Lead Generation: $10.19
- Offer claims: $2.58
- Post engagement: $4.43
- Dynamic product ads: $7.12
- Reach: $4.36
- Link Clicks: $3.13
- Video views: $1.05
- Since the middle of last year, Facebook publishers can set CPM Targets. Facebook will run ads from advertisers whose bids are at or above the CPM target. Publishers who participate in the CPM Targets program can optimize their waterfalls and make better predictions about revenue.
1. Does audience selection have an effect on Facebook CPM?
As discussed above, the way you target has a significant impact on your overall costs. Facebook ads face a lot of competition, and its generally best to try to find a balance.
If you narrow down your audience too much, your campaign could get quite expensive, while targeting too broadly may prove cheaper, but lead to little to no conversions.
2. What are some ways to raise my relevance score for Facebook CPM?
Facebook states the two major factors to focus on are your targeting and ad creative. To do so, focus on:
- Being specific with your targeting
- Refine your ads messaging and images
- Refreshing your ad over time
- Testing your ad for effectiveness
3. What is the average Facebook CPM?
According to a study by AdStage, the average CPM for different ad placements were as followed in 2019:
- Median News Feed CPM: $7.77
- Median Right Hand Placement CPM: $2.28
- Median Marketplace CPM: $3.39
- Median Audience Network CPM: $7.84
- Median Facebook Messenger CPM: $7.15
4. What’s the difference between CPM and CPC for Facebook?
Cost per thousand (CPM) is the cost of your ad per thousand viewers. Cost per click (CPC) is the cost paid per click on your ad.
5. Should I bid on Facebook CPM or CPC?
This will likely come down to your goals.
CPM is designed to get your ad in front of as many qualified users as possible and is better used for creating brand awareness. As with any marketing channel, sometimes it’s best to experiment with both bidding strategies to see which yields the best results for your particular ad goals.
6. What’s the Facebook CPM for Video Ads?
As with other ads, the CPM for video ads is based on the number of views it receives.
If you produce an ad that gets a lot of engagement, you can expect to pay a lower CPM than for an ad that people basically ignore.
Remember, with CPM you’re paying per delivery. So even if nobody watches your ad, you’re still going to spend money.
7. How Can I Determine the Facebook CPM for Competitor Ads?
Although there are plenty of tools that will help you “spy” on competitor ads, there’s none at this time that will show you the Facebook CPM for other ads.
That kind of financial info is kept private between the advertiser and Facebook.
You can, however, use a tool like PowerAdSpy to learn about the kinds of ads your competitors are running. You can also check out their landing pages.
Then, you can mimic those ads and get an idea of what they’re spending.
8. What is a good CPM on Facebook?
On average, a good CPM is $1.39, $1.38, $1.00, $1.75, and $0.78 for the retail, beauty, publishing, entertainment, and telecommunications industries.
9. How do you calculate CPM on Facebook?
Since CPM stands for “cost-per-mille,” it measures the total amount of money spent on an ad campaign, divided by impressions, multiplied by 1,000. For example, if you spent $100 and got 10,000 impressions, your CPM was $10.
Don’t let your Facebook ad costs spin out of control. Instead, follow certain best-practices that will reduce your Facebook CPM and maximize your return.