How to Reduce CPM on Facebook Ads (And Why High CPM Isn't Always Bad)

Cost per thousand impressions on Facebook has steadily climbed over the last few years. What used to cost £3-5 now costs £8-15 in many industries. If your CPM has crept up and your campaign performance is suffering, here's how to bring it back down.

But first, an important truth most advertisers miss: a high CPM isn't always a problem. Sometimes it's a signal you're reaching the right people. Let's talk about when to fix high CPM and when to leave it alone.

What Drives Facebook CPM

CPM is determined by an auction. Facebook decides who sees which ads based on:

Audience demand — how many other advertisers are bidding for the same audience
Ad quality — how relevant and engaging your ad is
Estimated action rate — how likely the user is to take the action you want
Time of year — Q4 is always more expensive than Q1
Industry — finance, insurance, and B2B SaaS pay more than e-commerce

You can't control demand or seasonality. You can absolutely control quality and action rate, which together account for the majority of CPM variation.

When High CPM Is Actually Fine

Before you panic about high CPM, ask yourself: am I converting at a profitable CPA?

If yes, leave your CPM alone. Some of the highest-performing campaigns I've seen have CPMs of £30-50. They're reaching small, valuable audiences that convert at 5-10%. The CPM is high but the CPA is brilliant.

High CPM is only a problem when:

Your CPA is also too high

Your reach is too low to spend your budget

You're in a broad audience and CPM is climbing for no clear reason

Don't chase low CPM at the expense of conversion. Look at the whole picture.

Step 1: Improve Your Quality Ranking

Facebook assigns every ad a quality ranking: above average, average, or below average. The lower your quality ranking, the higher your CPM.

Go to Ads Manager → Columns → Customise Columns → add "Quality ranking," "Engagement rate ranking," and "Conversion rate ranking."

To improve quality ranking:

Better creative. Eye-catching, scroll-stopping content gets more engagement. More engagement signals higher quality to Meta.
Reduce negative feedback. People hiding your ads or marking them as spam tanks your quality score. Make sure your ads aren't misleading or annoying.
Match your audience. Showing the wrong ad to the wrong people generates bad signals.
Refresh stale creative. Old ads burn out and quality drops.

Moving from "below average" to "above average" quality typically cuts CPM by 30-50%.

Step 2: Test Broader Audiences

Narrow audiences are usually expensive. When everyone is fighting for the same 50,000 people, the auction gets brutal.

Try expanding your audience. Remove some interest restrictions. Increase your geographic radius. Broaden your age range.

Facebook's algorithm is good at finding the right people in a broad audience, often at lower CPMs than narrow targeting allows.

Step 3: Avoid Highly Competitive Industries (When You Can)

Some industries have structurally higher CPMs because of intense competition:

Insurance

Financial services

Legal services

Real estate

Politics (during election cycles)

If you're in one of these, you'll never get the £4 CPMs that e-commerce advertisers see. Set realistic expectations.

But you can still reduce CPM by:

Targeting less competitive sub-audiences

Avoiding peak hours (6-9pm sees the highest CPMs)

Bidding outside major urban centres

Step 4: Use Advantage+ Placements

Manually choosing placements often increases CPM because you're competing in the most expensive auctions.

Let Facebook distribute your ads across all placements. Stories, Reels, Audience Network, Messenger, in-stream video — these often have much lower CPMs than the Facebook feed.

Go to Ad Set → Placements → Advantage+ placements (recommended).

Step 5: Run Ads Outside Peak Hours

If you check Ads Manager → Breakdown → Time of day, you'll see when CPMs spike. For most industries, 6-10pm has the highest CPMs because everyone's scrolling.

Use ad scheduling to run ads during cheaper hours. In Ad Set → Budget & Schedule → Run ads on a schedule, you can choose which hours your ads appear.

This only works on Lifetime budgets, not Daily budgets. And only do it if you have data showing your audience also converts during those off-peak hours.

Step 6: Refresh Creative Regularly

Ad fatigue drives CPM up. As people see the same ad repeatedly, engagement drops, quality ranking falls, and Facebook charges you more to keep showing it.

Swap creative every 2-4 weeks. Even small changes (different image, different headline) reset the engagement clock.

Keep 3-5 different ad variants in each Ad Set so the algorithm can rotate.

Step 7: Test New Audiences Regularly

The same audience seen too often gets expensive. People develop ad blindness. CPM creeps up.

Rotate your audiences:

Test new Lookalike sources

Try different interest combinations

Add fresh retargeting audiences

Expand to new geographic areas

Keeping your audience portfolio fresh prevents CPM creep.

Step 8: Improve Your Engagement Rate

Facebook gives priority to ads that get organic engagement. The more likes, comments, and shares your ads get, the lower your CPM.

Tactics to drive engagement:

Ask questions in your copy. "Which one would you pick — A or B?"
Use polls in Stories ads.
Make controversial statements (carefully — don't cross into offensive)
Tell a story. Stories get shared.
Make people laugh. Humour drives engagement.

A viral organic ad can have CPMs as low as £1-2 because Facebook is happy to amplify content people clearly love.

Step 9: Avoid Ad Set Stacking

Some advertisers create dozens of Ad Sets within one campaign, each with slightly different targeting. This causes them to compete with each other in the auction, driving up everyone's CPM.

Consolidate. Use fewer Ad Sets with broader audiences. Let Facebook's algorithm find the right people instead of fighting yourself in the auction.

Step 10: Use Campaign Budget Optimisation (CBO)

CBO lets Facebook distribute budget across Ad Sets based on performance. This prevents inefficient Ad Sets from driving up your average CPM.

Go to Campaign → toggle on "Advantage Campaign Budget."

When Low CPM Is a Trap

Be wary of strategies that produce extremely low CPMs but worse business results:

Audience Network spam traffic — looks cheap but converts terribly
Engagement bait — drives CPM down but doesn't lead to sales
Poor placements — some placements are cheap because they don't work

Low CPM is only good if it's also low CPA. Always look at conversion data alongside CPM.

CPM Benchmarks by Industry (UK)

Rough averages I've seen across accounts:

E-commerce (general): £6-12
Local services: £4-8
Restaurants/hospitality: £3-6
B2B services: £15-30
Coaching/consulting: £10-20
Finance/insurance: £20-50
Real estate: £15-35

If your CPM is significantly higher than these, something is wrong with your creative, audience, or quality ranking.

Common Mistakes

Obsessing over CPM in isolation. It's only one piece of the picture.

Hyper-narrow targeting. Drives up CPM unnecessarily.

Stale creative. The fastest way to make your CPM climb.

Manual placements. Usually worse than Advantage+ placements.

Ignoring quality ranking. The biggest single CPM lever.

Running ads only at peak hours. Most expensive auctions.

A Realistic Plan to Cut CPM

If your CPM is too high, here's the order I'd work through:

Day 1: Check quality ranking. Refresh creative if low.
Day 2-3: Switch to Advantage+ placements.
Day 4-5: Broaden your audience. Remove unnecessary restrictions.
Week 2: Add new creative variants to combat fatigue.
Week 3: Test new audiences (Lookalikes, broader interests).
Week 4: Review and double down on what's working.

Most campaigns see 30-50% CPM reductions in 4 weeks following this approach.

Keeping CPM low requires constant attention — refreshing creative, monitoring quality, testing audiences. If you'd rather have an algorithm handle this for you, Pix-Vu automatically optimises for both CPM and CPA simultaneously, at £99/month.

The takeaway: don't panic about CPM in isolation. Look at it alongside CPA. If both are too high, fix CPM. If CPM is high but CPA is good, you're probably reaching exactly the right people.