Facebook’s CPM Pricing Trends Continue to Surprise Us (But in a Good Way)
by Andrew Krebs-Smith | January 17
“May you live in interesting times.” It’s a familiar saying—and whether you see it as a curse or blessing, it’s probably a bit of both. Now that 2016 is behind us, it’s safe to say it was an interesting time—a year that defied the expectations of conventional wisdom. And no, we are not talking about politics—we are talking about Facebook’s CPM pricing trends post-holiday. When we compared the numbers from 2015 to last year’s, we were surprised—happily surprised. If you buy advertising, you will be too. Take a look at the chart in this post to see why.
- Desktop CPMs on Facebook did not follow last year’s trend of dramatic increases leading up to holiday
- Mobile CPMs actually dropped each month in Q4
Read on for our quick analysis:
In 2015, CPM rose dramatically in the weeks leading up to the holidays: 50 percent for desktop and 30 percent for mobile. In 2016, however, desktop increased only 15 percent, and fell back to pre-Christmas levels almost immediately. That’s a surprise, and the bigger surprise is in mobile. Here, we are seeing a continuing downward trend, with CPM falling by roughly 5 percent a month for each of the past four months.
Why is mobile’s CPM dropping? We can’t be certain, but we think it is a basic supply/demand function. Users are swapping to mobile faster than advertisers are. In the fourth quarter of 2016, nearly 90 percent of Facebook’s daily users came from mobile—the price decrease might reflect a glut in the supply of potential mobile ad viewers.
So, what do we forecast for CPM rates as we move deeper into 2017? We expect desktop pricing will stay relatively flat and that mobile will keep its downward trend for a while. Mobile advertising is a different animal from desktop, and getting comfortable with it might require practice. If you are not investigating mobile, now might be the best time to start.
Our portfolio management software helped us take advantage of the pricing anomalies and exceed goals at the end of the year. Reach out via email if you have questions on any of our data.