The year has already kicked off with a number of challenges for advertisers on paid social to respond to.
Taking tracking updates out of the equation, increasing costs is an omni present element that requires advertisers to get constantly smarter in order to squeeze the most amount of profit possible.
Why should you care about CPM? No matter what you are running on Facebook, the amount you pay for your ads is directly tied to CPM. Being a dynamic ad market, CPMs fluctuate based on a number of factors.
What you pay will clearly have a huge impact on your potential ROI, so as an advertiser being fully aware of trends and fluctuations in cost is a hugely important part of your day to day.
This post is a recap of what we saw on the platform across Q4 last year with aggregated data from a collection of accounts we manage.
Clearly the trends will be different depending on campaign types, audiences, markets and more, but being aware of the general trends is always extremely useful to help with planning for the future.
Q4 UK CPM
Throughout Q4 we saw the typical trend of costs rising through November and then a large spike over the uber competitive Black Friday weekend.
Everyone knows how competitive the BFCM weekend is, but it’s interesting to see just how much costs spike over the weekend (more than double the average of Oct – Nov):
CPM then drops off significantly towards Christmas day and then starts to rise back up from there, most likely due to boxing day sales kicking in.
Q4 – UK Year on Year
Probably the biggest point to be aware of is how costs are growing year on year and whether or not trends have changed.
Below you can see that the trend follows the same line, albeit with different Black Friday dates, but broadly it’s the same trend.
However, across the accounts included in our comparison data set we saw a 54% increase in CPM year on year over Q4.
Q4 – UK vs US
Comparing the UK to the US (where costs are generally higher), again the trend is broadly the same.
However, you can clearly see the trend in the US is far more pronounced over the Black Friday weekend with a much more extreme spike in costs.
You can also see that CPM rises far earlier in the US, however we do need to remember that 2020 saw the US elections with vast amounts of spend in October and November definitely having an impact on costs.
December – January
It’s also very interesting to see how Q4 costs flow into the new year. Clearly, it’s very early days, however you can see a big dip in the first week of January but a climb in CPM over the past seven days.
So far this month (January 2021) we are seeing lower CPMs year on year in some accounts, so if you can take advantage it’s a great time to be doing so!
ROAS trends
To provide some context against the trend in costs, the below shows the trend in how ROAS flowed across Q4.
Again, this is going to be hugely different for every account but certainly useful for context and to see how the trends in cost translate into return.
We definitely saw strong ROAS throughout Q4, however a large spike over the Black Friday weekend (as per the spike in costs) is clearly missing. In most cases, the sale weekend is a push on volume rather than ROAS, but it’s definitely interesting to see the difference in trends here.
Actions:
So, what actions can we gain from this data?
To a large degree, costs will be what they are due to the fact they are driven by competition on the platform.
Sadly we can’t control that, however there are elements you can test to try to keep your costs as low as possible. For example, testing different campaign types with lower cost bases and of course always trying to improve efficiency to get the most bang for your buck as possible.
Secondly, the key action here is to be aware of trends in your sector and your account. Without the knowledge of how costs are changing, you will always be missing a key information point and therefore the ability to react.
Hopefully this is useful and let’s see where 2021 takes us!
