Many people think that high CPMs (cost per 1,000 impressions) are just something they need to live with when they are advertising on Facebook* or Instagram, but that doesn’t always have to be the case. In my Facebook* ads agency, we’ve developed 6 hacks that can help you to lower your CPMs.
CPM is a metric that shows you how expensive your audience is to advertise to and it can directly affect your cost per conversion rates.
You can see your CPM in your ad dashboard in your cost per 1,000 impressions column.
Most of the time you can lower your CPM by using one of our hacks. But even when you do that, sometimes industry or advertising location can make your CPMs on the high side.There are some industries that are simply more expensive to advertise in than others. There are also some locations, like the United States, that are more expensive.
Even with situations where the CPM will be higher because of geographic location or industry, you can still often lower your CPM by using the following techniques.
The first problem that I usually see that causes high CPMs is advertising to an audience that is too small.
If your audience is too small Facebook* has a lot less flexibility around what groups of people they can show ads to. With a small audience size you’re forcing Facebook* to show ads to a very specific group of people and if other advertisers are showing ads to the same group it can drive your CPM rates up quite a bit.
Another thing that happens when your audience size is too small is that you rack up multiple impressions per person and that gives you a higher frequency number on your ads. Facebook* doesn’t like to show the same ads to the same people over and over again. And they will penalize you if that happens – which can cause your CPMs to go up.
When you give Facebook* a larger audience size then when one part of your audience gets expensive, Facebook* can send your ad to a different segment of your audience.
This is an easy one to fix. If your audience size is too small you can make it bigger.
There are certain audience segments on Facebook* and Instagram that are highly competitive. One of them is high net worth individuals. It might make sense to target only these people if you are selling something like private jets or high end, luxury real estate. But in most markets targeting only the top 1% of income earners or an even smaller number of people within the top 1% is a great way to increase your CPMs fast.
Most products and services – even expensive ones – do better when advertised to a larger group of people. There are often a lot of people outside of top income earners that will produce good results. People may be passionate about your product or service or really need it and could be willing to spend more on it.
There are other examples of highly competitive segments, but this is the one that I see business owners going after the most often.
The easiest fix to targeting the top 1% or other highly competitive segments is to test targeting other groups. I’ve found that expanding your audience can often dramatically reduce both CPM and cost per conversions – potentially leaving you with more profit.
Expending your targeting also has the plus side of increasing the longevity of your Facebook* campaigns because you’ll be advertising to a larger group of people and you won’t get ad burn out as quickly.
It’s worth a test.
Sometimes CPMs go higher because it’s not the best time of year to be advertising products and services to your audience. If you are advertising snowblowers in July then people won’t be as interested as they would be in January and they won’t pay as much attention to your ads. Facebook* picks up on these signals for ad engagement.
Seasonality effects a lot more business than people think. For some businesses it’s obvious. But for other businesses it’s not so obvious.
As an example, pedicures are something that people get all year, but that there is far more demand for pedicures starting in spring. HVAC services, certain types of dining experiences, and gardening are all examples of businesses with seasonality.
To figure out if seasonality is affecting your offer, you need to look at patterns in your advertising results. It may work best for your business to minimize spend when you are out of season and save that money for when your product or service is more in season.
If you are going to minimize spend during less busy seasons, you still want to keep some ads going in order to keep your warm audiences ticking along. This may be 10% or 20% of your normal budget. Then you can load the rest of your ad budget into the times when your business is booming.
There are different ways that you can restrict your audience. Sometimes people put all their ads only on Instagram or only on Facebook* because that’s “where there audience is.” Other times they only advertise to the newsfeed.
Currently, it’s more expensive to advertise on Instagram than it is on Facebook*. I would encourage you to try both platforms if you are currently only targeting one. This is especially true if you are just targeting Instagram now. Adding Facebook* back into the mix can potentially lower your CPM.
Sometimes clients say to me, “My best customers come from cities like LA or New York.” I understand that, but these are some of the most expensive places in the world to advertise in.
If you have a local service business in one of these places, then advertising just to that place might make sense. But if you sell products and services that people can access in other places then you should consider broadening the geographic area that you advertise to.
A person in rural Wisconsin might be interested in the product that you offer and advertising to that person is going to cost far less than advertising to someone in a large city.
If you have digital products or products that you can ship to other countries you can even broaden your ads to other places in the world and see if there is a demand for your products there. If there is you will often pay far less for your audiences in Asia and some parts of Europe than you will in Canada, UK, Australia, or the US.
Boring ads are a real problem for CPMs. If you have boring ads or a boring offer that people just don’t like then Facebook* is going to notice the lack of engagement and make it more expensive to show your ads.
The key to fixing this is to fix your ads and fix your offer. You can test different creatives, test video, test slideshows, and adjust your offer.
Don’t underestimate the importance of an amazing offer. Most Facebooks* ads that fail have offers that just aren’t strong enough.
Take the time to craft your offer and create compelling creatives and your CPMs will often come down.
*Recognized as an extremist organization and banned in the territory of the Russian Federation.
CPM is a metric that shows you how expensive your audience is to advertise to and it can directly affect your cost per conversion rates.
You can see your CPM in your ad dashboard in your cost per 1,000 impressions column.
Most of the time you can lower your CPM by using one of our hacks. But even when you do that, sometimes industry or advertising location can make your CPMs on the high side.There are some industries that are simply more expensive to advertise in than others. There are also some locations, like the United States, that are more expensive.
Even with situations where the CPM will be higher because of geographic location or industry, you can still often lower your CPM by using the following techniques.
Your Audience Is Too Small
The first problem that I usually see that causes high CPMs is advertising to an audience that is too small.
If your audience is too small Facebook* has a lot less flexibility around what groups of people they can show ads to. With a small audience size you’re forcing Facebook* to show ads to a very specific group of people and if other advertisers are showing ads to the same group it can drive your CPM rates up quite a bit.
Another thing that happens when your audience size is too small is that you rack up multiple impressions per person and that gives you a higher frequency number on your ads. Facebook* doesn’t like to show the same ads to the same people over and over again. And they will penalize you if that happens – which can cause your CPMs to go up.
When you give Facebook* a larger audience size then when one part of your audience gets expensive, Facebook* can send your ad to a different segment of your audience.
This is an easy one to fix. If your audience size is too small you can make it bigger.
Tons of Competition
There are certain audience segments on Facebook* and Instagram that are highly competitive. One of them is high net worth individuals. It might make sense to target only these people if you are selling something like private jets or high end, luxury real estate. But in most markets targeting only the top 1% of income earners or an even smaller number of people within the top 1% is a great way to increase your CPMs fast.
Most products and services – even expensive ones – do better when advertised to a larger group of people. There are often a lot of people outside of top income earners that will produce good results. People may be passionate about your product or service or really need it and could be willing to spend more on it.
There are other examples of highly competitive segments, but this is the one that I see business owners going after the most often.
The easiest fix to targeting the top 1% or other highly competitive segments is to test targeting other groups. I’ve found that expanding your audience can often dramatically reduce both CPM and cost per conversions – potentially leaving you with more profit.
Expending your targeting also has the plus side of increasing the longevity of your Facebook* campaigns because you’ll be advertising to a larger group of people and you won’t get ad burn out as quickly.
It’s worth a test.
Seasonality
Sometimes CPMs go higher because it’s not the best time of year to be advertising products and services to your audience. If you are advertising snowblowers in July then people won’t be as interested as they would be in January and they won’t pay as much attention to your ads. Facebook* picks up on these signals for ad engagement.
Seasonality effects a lot more business than people think. For some businesses it’s obvious. But for other businesses it’s not so obvious.
As an example, pedicures are something that people get all year, but that there is far more demand for pedicures starting in spring. HVAC services, certain types of dining experiences, and gardening are all examples of businesses with seasonality.
To figure out if seasonality is affecting your offer, you need to look at patterns in your advertising results. It may work best for your business to minimize spend when you are out of season and save that money for when your product or service is more in season.
If you are going to minimize spend during less busy seasons, you still want to keep some ads going in order to keep your warm audiences ticking along. This may be 10% or 20% of your normal budget. Then you can load the rest of your ad budget into the times when your business is booming.
Are You Overly Restricting Where You Put your Ads?
There are different ways that you can restrict your audience. Sometimes people put all their ads only on Instagram or only on Facebook* because that’s “where there audience is.” Other times they only advertise to the newsfeed.
Currently, it’s more expensive to advertise on Instagram than it is on Facebook*. I would encourage you to try both platforms if you are currently only targeting one. This is especially true if you are just targeting Instagram now. Adding Facebook* back into the mix can potentially lower your CPM.
Expensive Locations
Sometimes clients say to me, “My best customers come from cities like LA or New York.” I understand that, but these are some of the most expensive places in the world to advertise in.
If you have a local service business in one of these places, then advertising just to that place might make sense. But if you sell products and services that people can access in other places then you should consider broadening the geographic area that you advertise to.
A person in rural Wisconsin might be interested in the product that you offer and advertising to that person is going to cost far less than advertising to someone in a large city.
If you have digital products or products that you can ship to other countries you can even broaden your ads to other places in the world and see if there is a demand for your products there. If there is you will often pay far less for your audiences in Asia and some parts of Europe than you will in Canada, UK, Australia, or the US.
Your Ads Are Boring
Boring ads are a real problem for CPMs. If you have boring ads or a boring offer that people just don’t like then Facebook* is going to notice the lack of engagement and make it more expensive to show your ads.
The key to fixing this is to fix your ads and fix your offer. You can test different creatives, test video, test slideshows, and adjust your offer.
Don’t underestimate the importance of an amazing offer. Most Facebooks* ads that fail have offers that just aren’t strong enough.
Take the time to craft your offer and create compelling creatives and your CPMs will often come down.
The Bottom Line on Why Facebook* Audiences Get So Expensive
There are several reasons that Facebook* audiences can be expensive and can produce high CPMs. They include:- An Audience That is Too Small
- Tons of Competition
- Seasonality
- Overly Restricting Where Your Ads Go
- Expensive Locations
- Boring Ads
*Recognized as an extremist organization and banned in the territory of the Russian Federation.
