Did you know that the average CPM (Cost Per Thousand Impressions) for Meta Ads has been steadily climbing - in 2023’s Q4, the average CPM was $6.06 for social media.

Because the benefits of running social media ads are many, the competition intensifies on platforms like Facebook and Instagram.

The higher your CPM, the more you’re paying to reach your audience—and if you’re not careful, those costs can eat into your budget without delivering the results you need.

Lowering your CPM isn’t just about cutting costs; it’s about maximizing the return on every dollar you spend.

By reducing your CPM, you can increase the reach of your ads, improve your ROI, and ultimately get more value from your ad campaigns.

Let’s look at some tips on how you can achieve that.

Understanding Meta Ads CPM

What is CPM?

CPM, or Cost Per Thousand Impressions, is a pricing model used in digital advertising where advertisers pay a fixed rate for every 1,000 times their ad is shown.

For example, if your CPM is $10, you’ll pay $10 every time your ad is displayed 1,000 times.

This might not sound like much, but it adds up quickly, especially when you’re running multiple campaigns or targeting a broad audience.

Several factors can influence your CPM on Meta Ads:

Audience Targeting:

The more specific your audience targeting, the higher your CPM is likely to be. This is because you’re competing with other advertisers who are also trying to reach that same audience.

Factors like demographics (age, gender, location), interests, and behaviors can all drive up costs.

However, targeting a broader audience might reduce CPM but at the risk of reaching less relevant users.

Ad Placement:

Where your ads appear on Meta’s platforms—whether it’s in the News Feed, Stories, or Reels—can significantly affect your CPM.

For instance, ads in the News Feed often have higher CPMs due to their visibility and engagement rates compared to placements like Stories or the right column.

Ad Quality:

Meta’s algorithm favors ads that are relevant to users, meaning ads that resonate with your audience (high relevance score) are likely to have lower CPMs.

On the other hand, ads that don’t capture attention or generate engagement may see higher costs.

Competition:

The level of competition in your industry or for your target audience also influences CPM.

During peak advertising times, like holidays or major sales events, more advertisers are vying for attention, which can drive up CPMs.

If you have a deep understanding of the competitive landscape, you can time your campaigns better and adjust your strategy to minimize costs.

Strategies to Lower CPM on Meta Ads

Optimize Audience Targeting

The more refined and relevant your audience, the better your ad performance -and often, the lower your costs.

Start by leveraging lookalike audiences, which allow you to reach new people who are similar to your existing customers.

Also refine your custom audiences by narrowing down demographics, interests, and behaviors to target specific niches within your broader audience.

This way, you’re not wasting impressions on people who are less likely to engage with your ads.

For example, instead of targeting all sports fans, you might create a segment for fans of a particular sport or even a specific team.

Improve Ad Quality and Relevance

The better your ad quality and relevance, the more favorably Meta’s algorithm will view your ads, which can lead to a lower CPM.

Focus on crafting high-quality creatives and compelling copywriting that resonates with your target audience.

Experiment with different ad formats, such as video, carousel, and slideshow ads. Each format offers unique advantages, and testing various formats can help you discover what resonates best with your audience.

For instance, videos might work better for storytelling, while carousel ads can showcase multiple products or features.

Leverage A/B Testing

By testing different elements of your ad, you can identify what works best and refine your campaigns accordingly.

Conduct A/B tests on key components of your ads, such as headlines, images, and calls to action (CTAs).

For example, you might test two different headlines to see which one generates more clicks, or compare the performance of two different images.

Even small changes can make a big difference in your ad’s performance and cost.

Continuous testing is essential for maintaining low CPM. Meta Ads’ audience and competitive landscape can change rapidly, so what works today might not work tomorrow.

Choose the Right Ad Placements

Where your ads appear on Meta’s platforms can significantly impact your CPM.

Different placements have different levels of competition, visibility, and engagement, all of which influence costs.

Each placement has its own advantages - Stories might offer higher engagement due to their immersive nature, while Feed ads are highly visible and can generate significant reach.

You can use Meta’s automatic placements feature to save time and help you find the placements that deliver the lowest CPM.

Use Frequency Capping

Frequency capping is a useful technique for controlling how often the same person sees your ad.

While repeated exposure can be beneficial, too much repetition can lead to audience fatigue and higher costs.

Set a frequency cap to limit the number of times your ad is shown to each user.

This not only helps prevent ad fatigue but also ensures your budget is spent on reaching new users rather than overexposing the same audience.

You might start with a cap of two to three impressions per user per week and adjust based on performance.

What to Look Out for in Analytics

Analyzing the performance of your Meta Ads is crucial for ongoing optimization and cost management.

But what metrics should you be focusing on to ensure you’re effectively lowering your CPM?

• CPM Trends: 
  Regularly monitor your CPM to identify any sudden increases or decreases.
  This can help you pinpoint what’s working and where adjustments are needed.

• CTR (Click-Through Rate): 
  A higher CTR often correlates with a lower CPM.
  If your CTR is low, it may indicate that your ad isn’t resonating with your audience, leading to higher costs.

• Relevance Score/Quality Ranking: 
  Meta provides a quality ranking for your ads, which reflects how relevant your ads are to your audience.
  A higher ranking can lead to lower CPM, so pay close attention to this metric.

• Conversion Rate: 
  Ultimately, the goal of your ads is to drive conversions, whether that’s sales, sign-ups, or another action.
  A low conversion rate, despite a low CPM, could mean your ad isn’t as effective as it should be.

• Frequency: 
  Keep an eye on how often your ads are shown to the same users.
  If frequency is too high, you might be wasting budget on users who are less likely to engage.

How To Make The Most of Your Ads

You can simply apply the above tips to reduce your CPM.

But that is often time-consuming and needs some experience to interpret the analytics correctly.

Instead, you can make AI do the work.

AdsNerd is designed to take the guesswork out of managing and optimizing your Meta Ads campaigns.

As a chatbot, AdsNerd provides real-time insights and suggestions based on your campaign’s performance, making it easier to lower CPM and improve ROI.

This not only saves time but also ensures that your campaigns are always running at peak efficiency.