Does the cost of Facebook ads worry you? Are you certain it must look like this, and you’re waiting impatiently for your money to run out? The good news is you may keep within your settled budget, without going over it, and still have great ROI. The clue here is to understand what CPM in Facebook Ads really is, and how to keep it under control to earn, not lose money on Facebook Ads.
How to understand CPM?
With all the acronyms connected with Facebook ads, such as CPM, CPl, CPS, or CPC, you may easily get overwhelmed, and confused about how to optimize the cost of such a marketing campaign. A comprehensive understanding of the terms gives you a bigger possibility of a high return on investment, which means you use your budget on advertising wisely and effectively.
CPM is defined as cost per thousand impressions, and it may be useful to see a simple example explaining why it’s important to lower your CPM to achieve higher results and more views.
If you have $100, and you want to buy shoes, you may buy 2 pairs of each of them for $50. However, if the shop decides to increase the price to $100, you will only stay with one pair. However, in the opposite situation with the price lowered to $20, you will be able to buy even 5 pairs!
It’s the same with the CPM – if one thousand impressions cost you less, your ad will be seen more. What’s more, lowering the CPM influences the price of the cost per click, cost per lead, and cost per acquisition.
The cost of CPM depends on the ad relevance score, ad frequency, the size and location of the audience, or whether the ad is an image or video.
How to find and calculate CPM for Facebook Ads
To find out how much CPM for Facebook Ads costs you, use Facebook Ads reporting software, or do it on your own in Ads Manager. In the Ads, tab chooses the date range, and proceed to Performance and Clicks in the Columns drop-down menu. The CPM column shows you how much your brand spends on 1,000 impressions.
The last two years brought a significant increase in the cost per thousand impressions, not only on Facebook but on many other platforms too. To calculate the CPM, Facebook analyzes your ad campaign budget and the number of impressions it gets. The total amount you spend is divided by the impressions and multiplied by 1000.
What is a good CPM for Facebook Ads?
A good question to ask about CPM is how much is a good CPM? When should you try to lower it?
The answer to the questions is not easy though, as it depends on the part of the year, and the industry too, as it’s difficult to compare the IT and beauty industries. It’s best to compare your CPM to the benchmarks available online, bearing in mind the differences between various brands, as for the IT it’s around $3, and over $10 for Food & Beverages.
If you’re close to the benchmarks, or well below, it means you’re doing a great job. If you’re way above, you need to set up a strategy to lower it.
How to optimize or lower your CPM?
When your customer feedback is below 2 (on a 5-point scale), Facebook will punish you with higher CPMs, and even higher when your customer feedback drops to 1 or 0. You may check your customer feedback in the Business Manager.
The next important step is improving your Relevance Score, which means how relevant your ad is to your audience. It has much to do with proper targeting, which increases reach and decreases CPM when done correctly.
Finally, improve your Quality Ranking, closely related to user feedback and the post-ad experience. Make sure the content of your ad is relevant, and be honest instead of pretending your product or service is different than it really is. If your customers and viewers report or hide your ad, your CPM will surely increase.