Don’t be Discouraged by Rising Facebook CPM Costs

At some point, all good things must come to an end. That time is now for Facebook’s advertising cost per mille (CPM) of under $5.00. For us social marketers, we need to take a moment to grieve our loss. In the midst of that lamenting, we have to take time to tell those who have also loved our fallen comrade why this is happening.

Take a moment to explain to your clients or bosses, who in the past, have reaped the benefits of your early adoption of Facebook advertising, why their costs are now going up. You can do this by using a simple cost and demand refresher. The reality is, that despite the original excitement surrounding the possible success of Facebook advertising, most big, national, advertisers largely abstained from repositioning their traditional advertising spends to social media advertising until very recently. That’s not to say they didn’t adopt social media, but digital budgets have been more heavily concentrated on organic and engagement based marketing as opposed to social advertising modes over the past several years.

Big advertiser’s disregard of Facebook advertising, meant that the early adopters had a monumental opportunity for success, with especially high reward for video publishers. The ability to purchase impressions at $5 CPM, with equivalent reach and better concentration than other forms of digital and broadcast advertising, was like discovering gold for smaller companies throughout the country. But, as we all know, it’s tough to keep a secret like that for long.

Eager fishermen quickly lined up at the shores of the well-stocked lake. Stories of the bounty began to emerge in enterprise level board rooms. It was all downhill from there, as advertisers who traditionally operated campaigns which dominated television airwaves, learned how to reach audiences who typically abstained from broadcast networks: by occupying the prime real estate of their phone screens.

While the outlook might be bleak for the traditional media companies like ESPN, Bravo and MTV who have steered modern media for the past few decades, a little competition in the pond is not yet bad news for social advertisers. The continued growth of social media advertising means increased revenue for Facebook and other social channels. With that, we can expect to see higher investments into ad serving technology advances. Additionally, as paid content becomes normalized or even expected alongside organic posts, we will experience less of a revolt from social media users.

These positive side effects will certainly come at a higher price. If, in the past, you have been able to enjoy hundreds of dollars of revenue per every dollar spent on social, you’re in for a reality check my friend. Historically, most campaigns were expected to yield a return between 1.63 and 5 for each dollar spent, depending on the volume of your total expenses. Now, with CPM costs projected to rise by as much at 100%, you should prepare to cut your returns per dollar proportionately, and increase investment respectively.

As the demand to serve content to shared audiences grows, so too will the cost. By embracing this change before it wreaks havoc, you will be able to adopt bid strategies, that align with KPI goals, with a more conventional return on investment.