Determining a good cost per 1000 impressions (CPM) for Facebook ads can be tricky. The ideal CPM depends on factors like your objectives, target audience, industry, and type of ad creative. While there is no one-size-fits-all answer, here are some general guidelines for achieving an effective CPM on Facebook.
Typical Facebook CPM Ranges
According to Facebook, the average CPM across all industries is around $7.19 as of Q2 2022. However, average CPMs can vary significantly based on vertical and campaign objective:
| Industry | Average CPM |
|---|---|
| Ecommerce | $5.36 |
| Entertainment | $10.48 |
| Finance | $12.41 |
| Gaming | $7.84 |
| Retail | $6.51 |
| Travel | $9.28 |
As you can see, average CPMs span from $5-$12 across core industries. Finance and entertainment tend to be on the pricier end, while retail and ecommerce CPMs are more affordable. However, these averages can fluctuate daily based on competition, seasonality, and other factors.
CPM by Objective
Your campaign objective also significantly impacts average CPM. Campaigns focused on brand awareness or reach tend to have higher CPMs, while direct response objectives like conversions have lower CPMs. Here are some typical CPM ranges based on objective:
| Objective | Average CPM |
|---|---|
| Brand Awareness | $20-50 |
| Reach | $5-20 |
| Traffic | $5-15 |
| Engagement | $5-15 |
| Conversions | $5-10 |
| Catalog Sales | $5-10 |
Brand awareness campaigns demand the highest CPMs given their focus on mass reach over direct response. On the other hand, conversion-driven objectives allow you to achieve stronger ROI at lower CPMs. As a general rule, the further up the marketing funnel your goal is, the higher CPM you can justify.
Benchmark CPM by Industry
One of the best ways to gauge a competitive CPM is to benchmark against your industry averages. While the ranges above provide general guidance, your vertical and competitors will determine a truly effective CPM.
Here are some average CPM benchmarks for top industries:
- Ecommerce: $5-10
- SaaS & Software: $10-20
- Education: $10-15
- Healthcare: $10-20
- Finance: $15-25
- B2B Services: $15-30
- B2C Services: $7-15
Keep in mind these averages can fluctuate widely depending on your sub-industry, target audience, and product/service. It’s highly recommended to research competitive advertiser CPMs within your niche to determine an appropriate starting point.
Gauge Competition
You can gain insights into competitive CPM benchmarks within Facebook Ads Manager itself. Simply enter your target audience and desired placement. Before creating your campaign, click “Audience Insights” to view typical CPMs other advertisers are achieving for your target market.
You can also use this section to see audience size, top interests, and demographic data to refine your targeting. Gaining a sense of typical CPMs from competitors for your audience is key for setting initial bid prices.
Set Your CPM Bid Strategically
When setting up campaigns, you will need to enter your max CPM bid for Facebook ad auctions. Where you set this bid depends heavily on your goals, industry, and targeting.
For brand awareness and reach, you will need to bid aggressively to compete. Setting your max bid toward the higher end of your industry average is recommended, and you can optimize downward from there.
For lower funnel goals like conversions, you’ll want to start conservative with your CPM bid. Consider beginning at 50-75% of your industry benchmark and let Facebook automatically increase bids to hit your optimization goal.
Make sure to analyze your auction insights to understand your minimum needed CPM. Facebook will provide data on where your ad ranks percentage-wise compared to competitors. Use this to efficiently increase bids to where needed to win your target placements.
Leverage Facebook’s Automated Bidding
While setting an initial CPM bid is important, you don’t need to manually manage this over time. Facebook’s automated bidding algorithms work to keep your ads serving competitively based on your goals.
Use the “Bid Strategy” tool when creating campaigns to select your optimization goal. Options include lowest cost, conversions, reach, clicks, etc. Facebook will then automatically adjust your CPM bids to get the best results.
Ongoing monitoring is still recommended to ensure your CPM is staying within a profitable range. But leveraging Facebook’s automation takes the pressure off constantly manually optimizing bids.
Tips for Lowering Your CPM
While you want your CPM high enough to serve ads competitively, the lower you can achieve while still hitting KPIs the better. Here are some top tips for lowering your cost per 1000 impressions:
Refine Targeting
The broader your targeting, the more Facebook needs to spend showing your ads to less relevant users. Adding more demographic, interest, behavioral and lookalike targeting parameters will streamline your reach.
A good rule of thumb is targeting no more than 2-5% of your total audience size. Really narrow down your ideal customer profile.
Test Multiple Ad Sets
Run 3-5 ad sets per campaign with different targeting, bids, audiences, and placements. See which option delivers the best results cost-effectively and pause less effective ad sets.
Split Test Ad Creatives
Continually test new images, videos, and copy in your ads. The better performing your creatives, the lower cost to reach your audience and goals. Testing at least 3 variants helps find the ideal creative.
Use Automatic Placements
Let Facebook automatically determine the optimal placements and device types to show your ads vs. manually selecting placements. Their algorithms shifting billions of auctions daily helps reduce costs.
Set Schedules
Run ads during your audience’s peak online hours rather than 24/7. For example, you can often turn off late night/early morning hours with minimal impact on KPIs while lowering spend.
Pause Poor Performers
Regularly review your ads and pause those with CPMs significantly higher than competitors. Letting high CPM ads run can skew your averages.
Monitor and Optimize Over Time
Determining your ideal CPM is an ongoing process. You’ll want to monitor metrics like cost per result, ROAS, CTR and conversion rates to ensure your CPM translates to bottom line profitability.
Here are some key areas to analyze regularly:
Auction Insights
Check your minimum bid needed to maintain ranking and impression share. Make small incremental bid changes to meet these benchmarks without overspending.
Frequency and Reach
Monitor that you’re reaching enough of your target audience, but not showing ads too frequently per user to avoid waste.
Ad Fatigue
Watch for declines in CTR and conversion rates from overexposure. Create new ad creative and audiences to keep campaigns fresh.
Attribution
Use view and conversion attribution to understand your true CPM across conversion touchpoints. This helps accurately value impressions.
ROI and Margins
Do a bottom line analysis on profit from conversions compared to ad spend. Factor in margins to confirm positive ROI from your CPM.
Ongoing optimization is key to maximizing the efficiency and impact of your CPM on Facebook. Test new variables, analyze data, and refine targeting to stay competitive.
Conclusion
Determining your ideal cost per 1000 impressions requires looking at factors like objective, industry, competition, targeting, creative, and attribution. While averages range from $5-$50+ based on these variables, optimizing to your unique business situation is key.
Monitor both efficiency metrics like CPM and bottom line ROI to ensure profitability. Use Facebook’s robust analytics and automated bidding to maintain an optimal CPM balancing both cost and results over time. With the right optimization, you can achieve strong returns from Facebook at highly efficient impression rates.