What is CPM, why it matters and what it can tell you about running profitable ads

Here's what we have for you today

If you’re running Meta ads, you’ve probably heard that CPM is a rubbish metric.

I disagree entirely.

Now, don’t get me wrong. At the end of the day, all I care about is Profit On Ad Spending.

AKA – how much is left over after your ad spend and your unit cost.

But CPM can give you a lot of valuable insights into your ads.

What is CPM?

CPM is Cost Per Mille or cost per thousand impressions.

It’s how much it costs you to get your ad in front of a thousand people. We can’t fully control CPM, but it does give us some important feedback. Now, Meta has never defined exactly how CPM is calculated, but with a little reverse engineering, we can figure out what it’s telling us.

And we can use this data to improve our ad performance.

What does CPM tell you?

Simply put, CPM is a combination of the advertising competition for your audience and how much Meta likes your ads.

Meta lives and dies by it ability to get people to come back to the platform as often as possible and stay for as long as possible. To do this it has to make sure it’s a nice place for it’s users. As ads are a big part of a users feed, Meta peanilises advertisers who’s ads don’t add value to the user experience.

That penalty is in the form of high CPM’s.

What to do if your CPM is high?

If your CPM’s are high it’s time to look at your ads and your funnel.

Refining your message and more importantly your creative is key to reducing your CPM. Also ask yourself the question – Does my target audience really want what I’m offering? If it isn’t a top of mind problem for your audience the chances are they aren’t going to get excited about your ads.

We can’t control how competitive the advertising auction is but we can control how engaging our ads are.

The key to successful ads is creating content that your audience finds useful and interesting.

Instead of focusing on you and your offer think about your audience and what they want and need.

This is a surefire approach to profitable ads.

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