Holiday Competition and CPM

Don’t assume that Meta ad CPMs will go up this holiday season…

CPM, or Cost Per 1,000 Impressions, is directly connected to advertising costs. A primary factor driving CPM during the holidays is competition. If more advertisers spend more money in the auction, the cost to reach people should increase.

If CPM increases, your ads need to be more effective to remain profitable. Increased holiday CPM was once automatic, but it’s no longer the case.

Meta doesn’t officially report CPM in quarterly earnings, but they do reveal price per ad. And price per ad decreased year over year in the third quarter by 6%.

This is a trend. Price per ad was down 16% in Q2, 17% in Q1, and 22% last Q4.

This isn’t due to a drop in competition. Total ad revenue increased each quarter in 2023.

Meta Advertising Revenue by Geography

Ad costs didn’t go up because of an increase in impressions by 31% in Q3, 34% in Q2, 26% in Q1, and 23% last Q4.

Why? More users and engagement, largely due to Reels.

So, expect competition to increase during the holidays, but don’t assume an increase in CPMs. And this goes against what we normally expect.

What are you seeing?