What is Cost Per 1000 Impressions (CPM)? – Formula and Ways to Decrease Cost Per 1000 Impressions [With Examples]

What is cost per 1000 impressions (CPM)?

CPM stands for cost per 1000 impressions. CPM in Facebook ads is a metric used to ascertain the cost for every 1000 impressions.

This metric is used by Facebook advertisers to gauge the cost-effectiveness of an advertising campaign. 

How to calculate cost per 1000 impressions?

To calculate CPM, divide the ‘amount spent’ on the ad by the ‘number of impressions’ (not reach) your ad received. Then, multiply that number by 1000.

Remember, you’ll get the answer in your preferred currency, not a percentage. You can check your CPM in Facebook ads manager to avoid the math.

Formula for calculating CPM

CPM formula
CPM Formula

Real-life example of CPM

Let's understand CPM with an example - You are running an ad on Facebook which costs you $5 and your ad received 2,000 impressions. 

So, your CPM will be: 5/2,000 x 1000 = $2.50

What’s an average CPM? (benchmark)

In November 2022, the average Facebook CPM was $15.21. There isn’t a benchmark for a good CPM as it is largely dependent on your target audience and how you’re targeting them.

Facebook CPM varies at different times of the year, between industries and campaign objectives.

You can determine whether yours is a good CPM or not, by comparing it with your other ads or your ad account average. Utilizing a moving costs calculator tailored to your specific industry and target audience can help you gauge the effectiveness of your Facebook CPM in the context of actual moving-out scenarios, ensuring that your advertising expenses align with your campaign objectives and contribute to a successful and cost-effective outreach strategy.

Ways to decrease your CPM

  • Broaden your audience: If you’ll target a narrow audience, your frequency will rise fast as well as it’ll be more expensive to target a niche audience than a broader one.
  • Enhance your relevance score: You can check your ads’ relevance score under Relevance Diagnostics. If your ad is relevant to your audience, it’ll cost less as Facebook prioritizes relevant ads for their audience. On top of it, you’ll also get a higher reach.
  • Combat ad fatigue: Ad fatigue refers to when users see the same ad too many times which causes facebook to limit your ad’s deliverability. Find out about: The 12 Ways to Beat Facebook Ad Fatigue

Also Read: Related Metrics

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