Hi there,
Thanks for reaching out!
Happy to give you some initial thoughts on your CPM issue. It's a really common thing to get fixated on, but honestly, it's almost always the wrong metric to be worrying about. I'll walk you through why a high CPM can sometimes be a good sign and what you should be focusing on instead to actually grow your new brand.
TLDR;
- Your high CPM isn't the real problem; it's a symptom. Focusing on it is like worrying about the cost of petrol for a car with no engine.
- A higher CPM often means you're reaching a more valuable, in-demand audience. Cheaper audiences are cheap for a reason—they don't buy anything.
- The most important piece of advice is to stop optimising for vanity metrics like CPM and start focusing on your Cost Per Acquisition (CPA) in relation to your Customer Lifetime Value (LTV).
- Your creative being "better" is irrelevant if it doesn't speak directly to a deep, urgent, and expensive customer pain point.
- This letter includes an interactive calculator to help you figure out your LTV and what you can truly afford to pay for a customer.
CPM is a vanity metric, let's talk about what really matters...
I see this all the time. A founder gets obsessed with a single metric, like Cost Per Mille (CPM), and it sends them down a rabbit hole of optimising the wrong thing. You've paused your campaigns, worked on creative, and come back to a higher CPM. That's frustrating, I get it. But what if I told you that a rising CPM could actually be a sign that you're starting to do things right?
The core of the issue isn't the cost to show your ad to 1,000 people. The issue is whether those 1,000 people are the right people, and whether your message makes them act. Let's dismantle this and build a better framework for thinking about your ads.
We'll need to look at who you're actually talking to...
Forget the sterile, demographic-based profile your last marketing hire made. "Men aged 25-40 who like fitness" tells you nothing of value and leads to generic ads that speak to no one. To stop burning cash, you must define your customer by their pain. Your Ideal Customer Profile (ICP) is a nightmare, not a demographic.
You need to become an expert in their specific, urgent, expensive, career-threatening (or life-altering) nightmare. Your customer isn't just a job title or an age bracket; she's a person terrified of something specific that you can solve. For a new brand selling, say, meal prep containers, the nightmare isn't 'needing food storage'; it's 'the Sunday evening dread of another week of unhealthy takeaway lunches because planning feels overwhelming, leading to guilt and low energy'. Your ICP isn’t a person; it’s a problem state.
Once you've isolated that nightmare, you can find them. Where do they hang out online? What podcasts do they listen to? What influencers do they follow not for entertainment, but for real advice? This intelligence isn't just data; it's the blueprint for your entire targeting strategy. Do this work first, or you have no business spending a single pound on ads. When you target these niche, high-intent groups, your CPM will naturally be higher because you're competing for a more valuable audience. And that's perfectly fine.
I'd say you are paying Facebook to find non-customers...
Here is the uncomfortable truth about many campaigns on platforms like Meta. When you set your campaign objective to "Reach" or "Brand Awareness," you are giving the algorithm a very specific command: "Find me the largest number of people for the lowest possible price."
The algorithm, being a ruthlessly efficient machine, does exactly what you asked. It seeks out the users inside your targeting who are least likely to click, least likely to engage, and absolutely, positively least likely to ever pull out a credit card. Why? Because those users are not in demand. Their attention is cheap. By optimising for low CPMs, you are actively paying the world's most powerful advertising machine to find you the worst possible audience for your product. It's a false economy.
The best form of brand awareness for a new brand is a customer buying your product, loving it, and telling their friends. That only happens through conversion. Awareness is a byproduct of solving a real problem, not a prerequisite for making a sale. That is why you should almost always be running a 'Sales' or 'Leads' campaign, optimising for a conversion event. This tells the algorithm: "I don't care how much it costs to reach people. Find me the ones who will actually buy my stuff." The CPM for this group will be higher, because they are valuable. They are the buyers, and every advertiser wants them. You should too.
Path 1: Optimising for Reach (The Trap)
Path 2: Optimising for Conversions (The Goal)
You probably should create a message they can't ignore...
You mentioned your creative is "way better now." What does that mean? Is it prettier? Does it have better production quality? Because none of that matters if the message is wrong. Your ad needs to grab your ideal customer by the lapels and scream, "I understand your nightmare."
For a new brand, you deploy the Problem-Agitate-Solve framework. You don't sell a product; you sell relief from a specific pain.
Let's go back to those meal prep containers. A generic ad says: "Durable, leak-proof meal prep containers. Buy now!" It's boring, and it will get ignored.
A pain-focused ad says: "(Problem) Hating your sad desk lunch again? (Agitate) Another week of expensive, unhealthy takeaways is draining your wallet and your energy. (Solve) Take back control in just 1 hour a week. Our system makes meal prep simple, so you can eat well, save money, and feel great." See the difference? We're not selling plastic boxes; we're selling the feeling of being in control and healthy.
| Ad Component | Generic, Feature-Focused Ad (Bad) | Pain-Focused Ad (Good) |
|---|---|---|
| Headline | Premium Meal Prep Containers | Tired of Sad Desk Lunches? |
| Body Copy | Our containers are made from BPA-free plastic and are microwave safe. They feature 5 compartments for easy portion control. Order yours today. | Another greasy takeaway? That's £10 down the drain for a lunch that leaves you feeling sluggish. Our system makes healthy meal prep so easy, you'll actually do it. Save money, boost your energy. |
| Call to Action | Shop Now | Reclaim Your Lunchbreak |
| Focus | The product's features. | The customer's problem and desired transformation. |
You'll need to know the only numbers that actually matter...
So if CPM is the wrong metric, what are the right ones? The real question isn't "How low can my CPM go?" but "How high a Cost Per Acquisition can I afford to acquire a truly great customer?" The answer lies in its counterpart: Lifetime Value (LTV).
Most new brand owners have no idea what a customer is actually worth to them, so they panic at high ad costs. Let's fix that right now. We need three numbers:
- Average Revenue Per Account (ARPA): What do you make per customer, on average? If you sell one-off products, this is your average order value. Let's say it's £75.
- Gross Margin %: What's your profit margin on that revenue after cost of goods? Let's say it's 60%.
- Monthly Churn Rate %: For a subscription, this is the percentage of customers you lose each month. For eCommerce, it's a bit trickier, but you can estimate it based on repeat purchase rate. A simple way is `1 - (Repeat Purchase Rate)`. If 20% of customers buy again, your churn is effectively 80% (or 0.80) because you lose them after the first purchase. Let's use that for our example.
Now, the calculation is simple:
LTV = (ARPA * Gross Margin %) / Churn Rate
LTV = (£75 * 0.60) / 0.80 = £45 / 0.80 = £56.25
In this example, each new customer is worth £56.25 in gross margin to your business. This is your truth. A healthy business model aims for a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means you can afford to spend up to £18.75 to acquire a single customer (£56.25 / 3).
Suddenly, a £30 CPM doesn't seem so scary, does it? If that £30 CPM leads to a 2% click-through rate, and your website converts 3% of visitors into customers, your CAC is £25. It's still a bit high for our target, but now we're having a real business conversation. We're not tweaking ad colours; we're talking about improving website conversion rate or increasing average order value. We are focused on the numbers that actually drive profit.
Use this calculator below to play with your own numbers. See how small changes in margin or churn can dramatically change what you can afford to spend on ads. This is the math that unlocks aggressive, intelligent growth.
So, what should you do now?
I hope it's clear by now that your high CPM isn't something to panic about. It's just a noisy signal. Your job isn't to lower it; your job is to build a profitable customer acquisition engine. The path forward involves a radical shift in focus.
I've detailed my main recommendations for you below:
| Area of Focus | Actionable Step | Key Metric to Track (Instead of CPM) | Why It Matters |
|---|---|---|---|
| 1. Strategy | Define your customer by their deep, urgent "nightmare" or pain point, not their demographics. | Lead/Purchase Quality | This ensures your targeting and messaging are hyper-relevant, attracting people who actually need your solution, not just cheap eyeballs. This is the foundation for everything. |
| 2. Campaign Setup | Switch your campaign objective from Awareness/Reach to 'Sales' or 'Leads' (Conversions). Optimise for a bottom-of-funnel action. | Cost Per Acquisition (CPA/CAC) | You're telling Facebook to find buyers, not viewers. This will raise your CPM but should drastically lower your CPA and achieve profitable results. |
| 3. Creative & Copy | Rewrite your ads using the Problem-Agitate-Solve framework. Speak directly to the pain you identified in step 1. | Click-Through Rate (CTR) & Conversion Rate (CVR) | Relevant, pain-focused ads get higher quality clicks from people who are problem-aware, leading to better conversion rates on your landing page. |
| 4. Business Maths | Use the calculator above to determine your LTV and a target CAC (aim for a 3:1 LTV:CAC ratio). | LTV:CAC Ratio & Return on Ad Spend (ROAS) | This gives you your North Star metric. You can now make decisions based on profitability, not on meaningless metrics like CPM. You'll know exactly how much you can afford to pay for a customer. |
This is definitely a lot to take in, and implementing it correctly takes expertise. It's not just about flipping a switch in Ads Manager; it's about a fundamental change in how you approach growth.
If you're feeling a bit overwhelmed, that's completely normal. Getting this right is the difference between a brand that fizzles out burning cash and one that scales profitably. If you’d like to have an expert pair of eyes on your account and strategy, we offer a completely free, no-obligation consultation call where we can dive into your specific situation and give you some more tailored advice.
Hope this helps!
Regards,
Team @ Lukas Holschuh
