In 2024, advertisers around the globe face a common challenge: rising CPMs (Cost Per Mille). With increased competition, stricter privacy policies like iOS updates, and evolving user behavior, CPMs on platforms such as Meta, Google, and TikTok have steadily increased by 15-30% compared to previous years. For brands working with limited budgets, this rise can feel like an insurmountable barrier.

But rising CPMs don’t necessarily mean worse campaign results. In fact, advertisers who adapt their strategies can maintain or even improve their return on ad spend (ROAS). Let’s explore how to build competitive, cost-efficient campaigns despite increasing CPMs.

Understanding Why CPM Is Rising

Several factors contribute to rising CPMs:

• Increased Competition: More brands advertise digitally, especially in popular verticals like e-commerce and gaming.

• Privacy Changes: Apple’s iOS updates limit user tracking, reducing targeting efficiency, which raises costs.

• Ad Fatigue: Saturated audiences become less responsive, forcing higher bids to gain attention.

• Seasonal Demand: Peak seasons like holidays spike advertiser demand, pushing CPMs up.

For example, a fashion brand targeting a broad US audience saw CPMs jump from $7 to $12 in the last quarter alone. Yet, by adjusting their campaign setup, they improved cost efficiency.

Strategy 1: Funnel-Specific Budget Allocation for Better ROAS

Effective budget allocation is crucial. Split your campaigns into funnel stages with clear goals:

• Top-of-Funnel (TOF): Use broad reach and awareness objectives with cost-effective formats like short videos or Stories.

• Mid-Funnel (MOF): Retarget users who engaged with content using narrower audiences to keep CPMs reasonable.

• Bottom-of-Funnel (BOF): Focus the majority of your budget here on high-intent audiences (website visitors, cart abandoners) with conversion-optimized ads.

For instance, a gaming client allocated 65% of their budget to BOF, which resulted in a 25% increase in ROAS, even though their CPMs rose by 20%.

Strategy 2: Creative Rotation to Combat Ad Fatigue

Audience fatigue increases CPM and lowers click-through rates (CTR). Combat this by:

• Refreshing creatives every 7–10 days.

• Testing formats: user-generated content (UGC), testimonials, and short-form videos often reduce CPM by up to 15%.

• Avoiding overused static images, which can cause CPM and CPC to spike.

A cosmetics brand we worked with rotated between influencer videos and product shots, cutting CPM by 18% and boosting engagement rates.

Strategy 3: Consolidate Campaigns to Improve Algorithm Learning

Spreading a small budget over too many ad sets limits platform algorithms’ ability to optimize and often inflates CPM:

• Combine similar audiences and objectives into fewer ad sets.

• Allow the platform to find the best performing placements and demographics.

• Monitor performance closely and scale winning ad sets.

An e-commerce client saw their CPM drop by 12% and conversions increase after consolidating from 10 ad sets to 3, improving overall efficiency.

Strategy 4: Geo and Time-Based Targeting for Cost Efficiency

Not all audiences cost the same. Optimizing when and where your ads run can reduce CPM significantly:

• Identify lower-cost regions or cities with strong potential.

• Run ads during off-peak hours to benefit from less competition.

• Use automated rules to pause ads during expensive time windows.

For example, a food delivery brand reduced CPM by 20% by focusing on suburban areas and running campaigns between 10 PM and 6 AM.

Strategy 5: Leverage First-Party Data and Lookalike Audiences

Privacy changes have reduced the effectiveness of broad interest targeting:

• Use your own customer lists and CRM data to create lookalike audiences.

• Prioritize audiences based on purchase value or engagement depth.

• Refresh your data regularly for accuracy.

A gaming campaign that switched from broad interest targeting to a 1% lookalike of high-value purchasers improved ROAS by 35% despite a 10% CPM increase.

Final Thoughts: Work Smarter, Not Harder

Rising CPMs are an industry reality that won’t disappear soon. However, smarter campaign structures, creative agility, and data-driven targeting can offset these cost increases.

Instead of trying to outbid competitors with bigger budgets, focus on precision:

• Allocate budget by funnel stage.

• Refresh creatives before fatigue sets in.

• Consolidate campaigns to empower algorithm learning.

• Optimize by geography and timing.

• Harness your own data to build quality audiences.

With these strategies, even advertisers on tight budgets can remain competitive and profitable in today’s evolving digital advertising landscape.