Facebook CPMs Increase 171% In 2017 [Report]

Posted by on Sep 18, 2017 in PPC News
Facebook CPMs Increase 171% In 2017 [Report]

Over the last year, we’ve analyzed over 8.8 billion Facebook ad impressions. We found that during the first six months, the average CPM increased from $4.12 to $11.17, and the average CPC increased from $0.42 to $0.99.

Key Takeaways

  • The average CPM on Facebook ads has increased by 171% since January 2017
  • The average CPC on Facebook ads has increased by 136% since January 2017
  • The average CTR for Facebook ads has remained consistent over the last six months

Facebook’s Supply and Demand

Facebook’s ad impressions are flat while ad spend is moving up. This tells us advertisers are paying more to enter the auction while getting the same number of impressions.

AdStage Facebook Benchmark Report Spend vs Impressions

Facebook’s CPM Increase 171%

Based on our data, we saw CPMs increase by 171% during the first half of 2017. This shows how competitive the auction is and illustrates why Facebook is having ad load issues.

AdStage Facebook Benchmark Report CPM Increase

Facebook’s CPC Increase 136%

The CPCs of Facebook Ads went from $0.42 to $0.99 during the first six months of 2017. That’s a huge jump, especially when thinking about the role of Facebook in the customer journey.
AdStage Facebook Benchmark Report CPC Increase

Facebook’s CTR Remain Flat

Advertisers are getting consistent CTRs month-over-month, but it’s costing more to get the same result due to higher CPMs and CTRs.

AdStage Facebook Benchmark Report CTR Remains Consistent

Why Are Facebook’s CPMs Increasing

Our ad spend data includes all ads run on Facebook, Instagram, and Audience Network. There are a number of possible explanations for the increase in CPMs and CPCs.

1) Advertisers Are Flocking to Facebook

Facebook reported a total of five million advertisers as of April 2017. That’s up from four million monthly advertisers in September 2016, and three million in March 2016. Put another way — Facebook gained two million advertisers in one year.

Keep in mind that Facebook’s five million advertisers are only 8% of the 65 million businesses active on the network. Therefore, we don’t foresee a slowdown in advertisers’ growth over the next 12 months.

2) Advertiser’s Facebook Budgets Are Growing

Hanapin Marketing conducted a paid social survey asking marketers where they plan to increase and decrease budgets in 2017. They reported that 73% of marketers are investing the majority of their social spend on Facebook and 71% plan on increasing their Facebook ad spend within the next year.

Hanapin Paid Social Facebook

Our Facebook data confirms that advertisers are indeed increasing their Facebook budgets as overall ad spend more than doubled since January 2017 (122% increase).

AdStage Facebook Benchmark Report Spend

3) Facebook Is Reaching Max Ad Load

Facebook CFO, David Wehner, said on the Q2 2016 earnings call:

“We anticipate ad load on Facebook will continue to grow modestly over the next 12 months and then will be a less significant factor driving revenue growth after mid-2017.”

The company’s Q2 2017 results showed its reaching max ad load with only a 19% paid ad impression growth compared to Q1’17’s 32% and Q4’16’s 49% growth. However, Facebook’s revenue will continue to increase as surging ad prices, user growth, and Instagram are enough to pick up the slack.

4) Facebook’s Ad Load Slowdown Is Real

Facebook’s Q2 2017 paid ad impression growth slowed to 19% compared to Q1’17’s 32% and Q4’16’s 49%.

Eric Jhonsa of The Street reported:

Slower ad supply growth is naturally boosting prices. But given that supply is still growing (albeit at a slower rate), it’s also clear that strong ad ROIs — made possible by Facebook’s powerful and steadily improving targeting abilities — are motivating marketers to pay more for ad impressions and clicks. A growing mix of video ad sales might also be helping, given that video ads tend to carry relatively high prices.”

Takeaways and Insights

Based on the data, here are our main insights and takeaways:

  1. Small and mid-size brands are flocking to advertise on Facebook
  2. As a result, Facebook’s CPMs & CPCs are rising fast
  3. Advertiser aren’t afraid to increase budgets even as the auction gets more expensive

Further Questions

  1. Are results driving the increase in budgets or is it the competitive auction?
  2. How will advertisers react to increased competition and ad prices?
  3. Q4 is historically more expensive on Facebook, will they find more inventory or will CPMs skyrocket?

Our mission at AdStage is to connect paid marketers quickly and easily to the data they need to understand holistic campaign performance and take action at scale. If you want to learn more about our Facebook Ads reporting solution, click the banner below.

Facebook Reporting CTA

JD Prater

JD Prater

JD is the Head of Acquisition at AdStage. He’s a savvy marketer, digital strategist, and avid cyclist. A stereotypical coffee snob and recovering Coloradan, he’s a creative thinker who sees the big picture but loves getting lost in the details.

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  • Daniel Blackwell

    First off, interesting read, thanks for sharing your work.

    Could I inquire how you got the 8 billion impressions data? Was it from ads you or your associates ran or did you purchase the data, if so, from one or multiple sources? Im just interested to know a little more about that in any case.

    Also, it would be good to have a comparison to the typical cpm and cpc increase in any given year as the quarters progress. I personally have no clue what it could be, it could have been 110% for last year or it could have been 15% for all i know lol so it’d be cool to have a reference point from that.

    Also do you think since there is a 40% discrepancy for the cpm and cpc increase that it may be other attributing factors as opposed to a general increase in competition? Cause if it was those two figures should correlate pretty closely. I was thinking maybe an increase in popularity of facebook video ads, cause i know first hand that the cpms for those can tend to be pretty high, at least from my testing. I also thought there might be various contributing factors from any one of their placement channels, being there are so many unforeseen variables we probably aren’t even aware of in the diversity of their placements.

    Thanks again for the good article I enjoyed it,

    Dan

    • JD Prater

      Hey Daniel! 8 billion impressions is from our customer data running through AdStage. This data was only for 2017 as it’s our first delivering a metrics report. We have data for 2016, but that wasn’t the purpose of this post.

      We found with our data combined with Facebook’s data that the News Feed is getting crowded which is increasing competition for advertisers and brands. As for placements, we plan on breaking those out in our Q3 report in October. Stay tuned!

  • Spodr

    Great article man!
    now that we discussed the problems, what options do we have?