Does a Higher CPM Mean You Should Spend More?
Today's question is about CPM being double in the US versus the UK and whether that means you should allocate double the budget. CPM varies by country due to competition, but higher CPM doesn't automatically mean worse performance. Jon explains when to combine countries versus split them, how Meta balances costs and conversion rates, and why you should let results guide your budget allocation instead of CPM alone.
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Question
Hi Jon. This is Martina from Cambridge in the UK and I have a Pubcast question about CPM. I run ads in both the UK and US. My CPM in the US is usually double the UK for exactly the same ads.
I like to understand why the CPM is double in the US and whether that means that I should allocate a double budget to it.
Answer
This is a great question, Martina.
So CPM is Cost Per 1,000 Impressions. In other words, the cost to have your ad shown. And the CPM is going to be different by country.
So Martina has noted that CPM in the US is double that of the UK. Now, I did a little bit of digging on this to see what others are reporting, and this appears to be consistent with overall trends.
Meta doesn’t provide official stats on this, but the average CPM in the US seems to be just over $20 while the average CPM in the UK is closer to $10.
Of course, CPM is driven by several factors beyond the country, including industry, performance goal, your ads, and overall competition. But let’s assume a roughly $20 CPM in the US and $10 CPM in the UK.
That means that $20 can get you either 1,000 impressions in the US or 2,000 impressions in the UK.
Now, that’s not necessarily a problem in and of itself. CPM is only one element related to your final costs and profitability.
CPM is highest in the US due to competition, and that could be reflected in a higher conversion rate and ROAS. It could be, of course, but isn’t necessarily.
And advertisers in the UK have experienced regulatory challenges lately related to location fees and ad-free subscriptions.
So one question I have is whether you combine the US and UK in the same ad set or not.
If combined, there’s not necessarily anything you need to do. Meta should balance the costs and conversion rates involved for both countries to get you the most results overall.
You’re unlikely to spend equally in each country since it should be driven by the number of conversions you can get.
But if you’ve separated these countries into their own ad sets, that’s where you may want to address the budgets.
As I always say, you should let results be your guide.
Are you getting a similar number of conversions from each ad set? Are the results meaningful, or are you finding that performance in the US is far more limited?
Without knowing exactly how you’ve structured things, I’ll say this.
If overall conversion volume and stability are a problem, I’d combine the countries into the same ad set. At that point, I wouldn’t be particularly concerned about how much of my budget goes to the US and how much goes to the UK.
That assumes, of course, you don’t have important business goals for each country.
While splitting these countries up can be useful, it’s mainly to create ads that are more relevant to people in each country. And that’s really only for the situation where you have enough budget to split things up and continue to get meaningful results.
And if that’s the case, it would be completely plausible that you may need to spend more to get the same number of results from the US as the UK.
I’d also consider the cost per result and overall value of those conversions, of course.
Thanks for your question, Martina, I hope this helps!