As a user of Facebook advertising, it is necessary to understand CPM (cost per thousand impressions) and the seasonality of advertising competition. Because just a change in the CPM indicator can turn an advertisement with a high conversion rate into an advertisement with poor performance.
For those who advertise year-round, you should find that this time of year is always tougher, but that doesn’t mean advertising at this time can’t be profitable. What we need is to understand the current environment and how it affects advertising performance.
Seasonality of CPM
First of all, CPM, which is cost per thousand impressions, is affected by many factors. The Facebook ads we place are bidding against millions of other advertisers, which can be thought of as a competitive auction. Among them, the price in the auction has been pushed up due to the quality of the advertisements, the size of the audience and the competition between advertisers. In Western countries, there are generally more holidays at the end of the year. Competition becomes an amplified factor during the year-end period as some brands choose to only advertise during the holiday period, or some advertisers choose to increase spending during this period.
So as more advertising dollars are pumped in, the “audience inventory” becomes tighter and competition for the same audiences becomes more intense. The result is that the cost of reaching this audience increases—and the CPM gets higher.
The impact of increased CPM
You can imagine that in September and October, your advertising was still profitable. Two months later, the cost per conversion increased sharply, but other indicators did not change much. Your ad conversion rate remains the same, but you are reaching fewer and fewer audiences with the same budget, resulting in fewer conversions per day.
Why is this? Because CPM has increased
As we all know, during the year-end holiday period, CPM may double or even triple. When this happens, assuming that the conversion rate cannot continue to increase, the conversion cost will naturally double or even triple.
In a "normal year" this would be normal. At this time last year, perhaps due to the epidemic isolation, people were eager to get online, so the CPM value was different compared to now. But if you compare it to earlier this year, you should definitely see it increase.
Increase in CPM can still make a profit
There’s a reason why brands and advertisers are more competitive with each other during this period—people are more inclined to spend during the holidays. Therefore, the conversion rate of advertising will be relatively improved during this period. Therefore, you can respond to the increase in CPM by improving the conversion rate, such as providing discounts or defining products as gifts, etc.
What’s important to know is that if you continue to run ads in the same way throughout the year during the year-end holidays, your results will only get worse. This may be a challenge for most Facebook ad users. Only by paying close attention to and understanding the problems currently faced will it be possible to find solutions.
For those who advertise year-round, you should find that this time of year is always tougher, but that doesn’t mean advertising at this time can’t be profitable. What we need is to understand the current environment and how it affects advertising performance.
Seasonality of CPM
First of all, CPM, which is cost per thousand impressions, is affected by many factors. The Facebook ads we place are bidding against millions of other advertisers, which can be thought of as a competitive auction. Among them, the price in the auction has been pushed up due to the quality of the advertisements, the size of the audience and the competition between advertisers. In Western countries, there are generally more holidays at the end of the year. Competition becomes an amplified factor during the year-end period as some brands choose to only advertise during the holiday period, or some advertisers choose to increase spending during this period.
So as more advertising dollars are pumped in, the “audience inventory” becomes tighter and competition for the same audiences becomes more intense. The result is that the cost of reaching this audience increases—and the CPM gets higher.
The impact of increased CPM
You can imagine that in September and October, your advertising was still profitable. Two months later, the cost per conversion increased sharply, but other indicators did not change much. Your ad conversion rate remains the same, but you are reaching fewer and fewer audiences with the same budget, resulting in fewer conversions per day.
Why is this? Because CPM has increased
As we all know, during the year-end holiday period, CPM may double or even triple. When this happens, assuming that the conversion rate cannot continue to increase, the conversion cost will naturally double or even triple.
In a "normal year" this would be normal. At this time last year, perhaps due to the epidemic isolation, people were eager to get online, so the CPM value was different compared to now. But if you compare it to earlier this year, you should definitely see it increase.
Increase in CPM can still make a profit
There’s a reason why brands and advertisers are more competitive with each other during this period—people are more inclined to spend during the holidays. Therefore, the conversion rate of advertising will be relatively improved during this period. Therefore, you can respond to the increase in CPM by improving the conversion rate, such as providing discounts or defining products as gifts, etc.
What’s important to know is that if you continue to run ads in the same way throughout the year during the year-end holidays, your results will only get worse. This may be a challenge for most Facebook ad users. Only by paying close attention to and understanding the problems currently faced will it be possible to find solutions.
