Solved: Facebook CPMs are $100 - When Will They Drop?

Hi there,

Thanks for reaching out!

Happy to give you some initial thoughts on the high CPMs you're seeing. It’s a common frustration, especially this time of year, but I think you might be focusing on the wrong problem. The answer isn't just to wait for costs to drop, it's to build a strategy that's profitable even when they're sky-high. Let's get into it.

We'll need to look at why obsessing over CPM is costing you money...

I get it. You open up Ads Manager, see a $100 CPM, and your stomach drops. It feels like you’re just burning cash. You said "i know my creative is good enough," and that might be true, but the real question is whether your business model and strategy are good enough to compete when the stakes are this high. Everyone's screaming about high CPMs, but hardly anyone stops to ask the right question: "So what?"

The truth is, CPM is a vanity metric. It tells you how much it costs to show your ad 1,000 times, but it tells you absolutely nothing about the quality of those 1,000 people or the profit you made from them. During Black Friday and the run-up to Christmas, you are not targeting the same audience you were in August. You're targeting an audience that has its credit card out, actively looking for deals, and ready to spend. The competition is fierce because the prize is enormous. These aren't just any impressions; they're the most valuable impressions of the year. You're paying more because they are worth more.

So yes, to answer your direct question, costs will probably dip after Cyber Monday. But they’ll stay elevated through December. And then they'll spike again for Valentine's Day, Mother's Day, and every other major retail event. Relying on "cheap" ads is not a business strategy. A real strategy is being able to afford the expensive ones because you know you'll make more money back than you put in. The problem isn't the cost; it's whether you're equipped to profit from it.

I'd say you need to shift your focus from cost to return...

You're getting sales. That's the most important thing you wrote. So, are you profitable? If you spend $100 and make $300 back, who cares if the CPM was $10 or $100? This is where you need to get religious about tracking your Return On Ad Spend (ROAS). It's a simple calculation: Revenue from Ads / Ad Spend.

If your ROAS is profitable, you pour more money in. If it's not, you either fix the campaign or turn it off. That's it. It’s the only metric that directly connects your ad spend to your bank account. I've worked with eCommerce clients who have a 2x ROAS and are losing money because their margins are thin. I've also worked with software clients where a 2x ROAS is wildly profitable because they have 90% margins and a high customer lifetime value. I remember one campaign we worked on for a women's apparel brand that hit a 691% return. Their CPMs weren't low, but they had the right product for the right audience, so every pound they spent brought back almost seven. That’s the game you need to be playing.

You need to know your numbers inside out. What's your average order value? What are your product margins? What is your break-even ROAS? Once you know that, the CPM figure just becomes noise. You start making decisions based on profit, not cost. Use the calculator below to get a feel for it. Play with the numbers. See how a high ad spend can still be incredibly profitable if the revenue is there.

You probably should calculate your real customer lifetime value...

This is where we separate the amateurs from the professionals. If ROAS is the key metric, then Customer Lifetime Value (LTV) is the secret that unlocks the entire system. Your LTV tells you how much a customer is worth to you over their entire relationship with your business, not just their first purchase. When you know this number, you stop thinking about "how low can my cost per purchase be?" and start asking "how high a cost per purchase can I afford to acquire a customer who will be worth thousands to me?"

Let's do some simple maths. You need three bits of info:

1. Average Revenue Per Account (ARPA): What’s the average a customer spends with you per month (or year, depending on your model)?
2. Gross Margin %: What's your profit margin after the cost of goods? If you sell a product for £100 and it costs you £30 to make, your margin is 70%.
3. Monthly Churn Rate %: What percentage of customers do you lose each month?

The calculation is: LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

Let's say you run a subscription box. ARPA is £50, your gross margin is 60%, and you lose 5% of your customers each month. Your LTV is (£50 * 0.60) / 0.05 = £30 / 0.05 = £600. Every single customer you acquire is worth £600 in gross margin to you. A healthy business model aims for at least a 3:1 LTV to Customer Acquisition Cost (CAC) ratio. This means you can afford to spend up to £200 to acquire a single customer. Suddenly, paying a high CPM to get in front of the right person doesn't seem so scary, does it? It looks like a brilliant investment.

This is the maths that allows companies to scale aggressively. They're not getting "cheaper" ads. They've just done the homework and realised they can afford to outbid everyone else because they understand the long-term value of a customer.

You'll need to diagnose the real problem: your targeting and offer...

If you know your numbers and you're still not profitable, then the high CPMs are not the cause of the problem, they're just exposing the real weakness in your buisness: your targeting or your offer. You can't afford high CPMs if you're showing your ads to the wrong people, or if you're showing the right people a message they don't care about.

Forget broad demographics. "Women aged 25-45 in the USA" is not a target audience. It's a recipe for burning money. You need to get deeply specific about the customer's pain. What is the urgent, expensive, career-threatening nightmare that keeps them awake at night? Your product must be the solution to that nightmare. For an eCommerce store, it's not "selling nice jewellery"; it's solving the panic of "I have a big event next week and nothing to wear that makes me feel confident." Your ads need to speak directly to that panic.

This is what we call defining your Ideal Customer Profile (ICP) by their problem state, not their personal stats. When you do this, your ad copy writes itself, and your targeting becomes laser-focused. You start looking for people who follow specific influencers, who are members of niche Facebook groups, who use complementary software. You build an audience of people who are practically pre-qualified because you're targeting their pain.

This is the main advice I have for you:

So, what should you do right now, and for every high-competition period in the future? It’s about shifting from a defensive mindset ("how do I save money?") to an offensive one ("how do I make more money?").

I've detailed my main recommendations for you below:

This is a completely different way of thinking about paid advertising. It's not about finding cheap tricks or waiting for the "right time". It's about building a robust marketing engine that works because its foundations—the numbers, the targeting, the offer—are solid. It's how we've helped countless clients, from eCommerce stores to B2B software companies, scale their revenue even when their competitors are pulling back in fear of high costs.

Moving from just running ads to building a strategic growth system can be a big leap. It involves a deep understanding of auction dynamics, financial modeling, and customer psychology. This is where getting professional advice can make a huge difference.

If you'd like to go through your specific situation in more detail, we offer a free, no-obligation initial consultation. We can review your account together, look at your numbers, and give you a clear roadmap for what to do next. It's often the most valuable 20 minutes a business owner can spend on their marketing.

Hope this helps!

Regards,

Team @ Lukas Holschuh