Two elements, supply, and demand determine CPM and CPA on Facebook. Brainlabs Global VP of Social, Ofir Halfon, has completed an extensive analysis of the UK and US market for multiple verticals and compiled recommendations to help you prepare for the holiday season. If you’d like to see even more ideas and industry news, we recommend checking out the Clicks & Mortar – Digital E-Comm success for the holidays on-demand webinar. 

Supply & Demand

Before we begin, let’s define the essential elements of the advertising space:

ElementDepends on

Supply (or available impressions)
The number of ad placements* and the number of people using Facebook products. 

Both the number of advertisers and how competitive they are (e.g. how much they are spending).

*The number of placements only changes when Facebook launches new products

Over the past year, we saw fluctuations in CPM and CPAs which were a result of changes in supply and demand in the Facebook ad ecosystem: 

During the first lock-down, users were spending more time on the platform so supply rose, while advertisers pulled back budgets and reduced the demand. These led to a dramatic decrease in CPMs across all verticals. 

We’re now at the ‘economic recovery’ stage: users are still working from home and spending the same amount of time on the platform (meaning supply stays the same); while advertisers are increasing their investment in the platform after a year of holding back their budget (meaning demand is rising). These are leading to a big increase in CPMs across all verticals. 

The upcoming festive season should increase platform usage (supply) but also lead to an increase in advertisers’ budgets (demand). 

We analyzed Brainlabs client’s results over the past few years and found that on average CPMs increased up to 93% in the US on BlackFriday and up to 80% in the UK in the days before Christmas. 

5 Recommendations (with examples and stats) based on our learnings:

Increase investment in video creative 

Facebook is investing in increasing ad-placements for video assets (IGTV, In-Stream, and Reels), as the supply is growing, bidding on this inventory should be cheaper and help you make the most of every penny spent on the platform. 

Invest in creatives that Stands Out 

With four big shopping events coming up and big budgets spent on festive productions, advertising on social media during December can be very competitive. Below are the two big questions we’re asking:

  • Will your creative get the users’ attention?
  • How does it differentiate from the rest of the ads on the platform?

It’s time to try more engaging ad-formats such as AR (Snap Lens / Instagram Effect) and automated messaging experiences (Messenger, Instagram Direct, and WhatsApp). These can help your campaign stand out, and ensure potential customers have the most engaging experience all the way through checking out on site.

One example to consider is chatbot ads (pictured above)

In collaboration with Harrods, we ran paid social campaigns on Facebook to promote their Christmas Gifting Chatbot, developed by Spectrum. Users answered a series of questions around who they were buying for, and with what budget, before the chatbot recommended suitable gifts.

The campaign generated 20,000 messages, sent at a cost-per-message of £0.80. Delivering an engagement rate of 2x from the account average!

Put your products in the front 

In the weeks leading to Christmas, users are looking to shop and will make impulsive purchases when they see the right product. According to our analysis, advertising during the holiday season is much more effective than the rest of the year with a 67% average decrease in CPA in North America and the UK.

In other words, while CPMs rise, strong product performance can offset that cost – so put your products forward! 

Consider redistributing budgets from Facebook into other social platforms (e.g. Pinterest, Snap, and TikTok) 

Over the past 18 months the major social platforms have introduced new social commerce tools that can help advertisers get in front of audiences at the product discovery stage, and then move these customers through the purchase journey to maximize the return on ad spend. 

Below are some further resources regarding Dynamic Creative opportunities in Facebook, Collections Ads in Pinterest, and general holiday advice from Tik Tok:

Prepare for Q5 

Q5, the post-Christmas period into the new year, is a prime advertising opportunity because supply is still high but demand bottoms out as advertisers cease their holiday budgets. [Statistics from Facebook]. Consider planning a Q5 promotion (perhaps testing out other social platforms as we mentioned earlier!)

The economics of the advertising space boils down to supply and demand. Now that demand has surpassed supply, CPMs on Facebook have increased and will continue to. Diversifying your social platforms and testing new inventory types in Facebook can help you stand out in an overburdened market. Brainlabs can help you kick off your new social strategy or optimize your current setup for the best results!