How Meta Ads Performance is Affected by Rising CPM

CPM (Cost Per 1,000 Impressions) is a crucial metric for Meta ads performance, but it can be erratic. It can significantly affect the perceived success of your ads, regardless of their actual quality. Factors within your control, like targeting restrictions, demographics, geography, placements, estimated action rate, and ad quality, can drive up CPM. However, uncontrollable factors such as competition, the learning phase, and randomness also play a role. It's important to recognize that while CPM is important, it should not be treated as a primary metric or Key Performance Indicator (KPI).

Several factors within your control can drive up CPM, including:

1. Targeting Restrictions: Limiting your audience too much can increase CPM.
2. Demographics: Restricting age and gender can drive up costs.
3. Geography: Targeting expensive countries or specific regions can increase CPM.
4. Placements: Manually removing placements can limit options for the algorithm.
5. Estimated Action Rate: A low estimated action rate can increase CPM.
6. Low-Quality Ads: Ads that are considered low-quality by Meta can lead to higher CPM costs.

Uncontrollable factors that affect CPM include:

1. Competition: Increased competition, especially during seasonal events like Black Friday, can drive up CPM.
2. Learning Phase: Ad delivery and performance are unstable during the Learning Phase, often resulting in inflated CPM.
3. Randomness: Sometimes, CPM can fluctuate for no clear reason, making it unpredictable and uncontrollable.

CPM should not be treated as a primary metric because it is not a Key Performance Indicator (KPI). While it can affect the perceived success of a campaign, it is influenced by many factors, some of which are outside your control. Focusing too much on CPM can lead to misguided decisions. Instead, it's better to focus on overall campaign performance and other KPIs. Lowering CPM does not necessarily guarantee better results, as it may not lead to an acceptable Cost Per Action (CPA).

The author theorizes that the high CPM for the Cornerstone lead magnet is not due to a lack of appeal but rather a combination of factors. Despite using nearly identical settings for both the Beginner and Cornerstone ad sets, the CPM for Cornerstone is higher. The author believes that patience is needed, as CPM often starts high and trends downward after the first few days or week. Additionally, the build-up to Memorial Day Weekend may have contributed to increased competition, although the author doubts this is the primary driver.