We help clients maximize the effectiveness and efficiency of their digital advertising—and of course a great deal of that advertising relies on Facebook as a platform. The intensive buying we do on Facebook results in a tremendous amount of data you can use to plan spending patterns. On the chart below, you will see Facebook CMP data. CPM is the industry acronym for “cost per thousand impressions,” which simply means how much it costs for 1,000 people to be exposed to your ad.
Understanding the data
Before we explore what the trends could mean for you, it is important to understand exactly what you are seeing. This data represents ad impressions delivered on behalf of our clients between January 8, 2015, and October 8, 2016, and it has been adjusted so that changes in our client base do not skew the average CPM one way or another. It is also important to keep in mind that our clients are usually trying to reach to high-value audiences—people who convert into paying customers. This type of audience is typically more expensive than general audiences. At the same time, they are looking for the lowest cost per customer acquisition (COCA) possible.
Also, CPM varies widely across clients–ranging from $8 to $25. This data is not meant to predict the CPM for any particular campaign—but it does a great job in showing ad price trends over time. The two lines represent Facebook’s desktop and mobile ads, and the graph shows that the general trend in CMP over the past 21 months on both. If you trace the lines, you’ll see both are affected by the same seasonal trends as well.
Let’s start looking in mid-July 2015, when both desktop and mobile CPMs were at an all-time low on the chart. You’ll see that prices started to climb at a fairly steady pace from September 2015 through December 2015. Over this time, CPMs on desktop jumped by 50%, while mobile increased by 30%. This spike in Q4 prices is predictable—as retail advertisers start competing for parts of the holiday spending binge. Prices going up have consequences, of course. Note the slight dip that occurred in early November, 2015. This is probably attributable to advertisers stabilizing their budgets, prior to launch Black Friday and other holiday campaigns.
After the 2015 holidays, mobile and desktop CPM began to diverge. Desktop CPMs rapidly dropped by 15% and maintained this lower rate until about mid-February. Mobile’s CMP did not rise as dramatically as desktop’s did, but it did not fall as drastically either. Mobile dipped briefly after the 2015 holiday season, then rose back to holiday levels and stayed there.
So how can you use this data?
That CPM goes up steeply before the holidays is basic economics: As demand increases, prices tend go up. The big story is that the holidays were not the price peak of the past 21 months. As you can see, CPMs reached an all-time high in late May 2016. What that means for advertisers is that the price climb for the 2016 holiday season will start from a higher CPM than last year. Our data from the first week of October is beginning to show signs of the approaching price climb already. Here are a few tips to help in your near and intermediate term planning:
- If you’ve seen higher CPMs in recently, expect them to continue to climb throughout November and December.
- If you are planning to launch holiday campaigns, be aware of the increased pricing, and budget accordingly.
- If you are bidding manually, be prepared to increase bids to remain competitive.
- If the holiday season does not have a big impact on your business, this may be a good time to scale back on your spend. Why pay higher prices if you’re not going to reap commensurate benefits.
- Last, if you are positioning your business to take advantage of the post-holiday dip, be aware that if 2017 trends the way that 2016 did, the post-holiday dip might be brief.
If you have questions or need guidance as to how best to approach spending now and in the future, we’d be glad to talk with you.