Data presented by OnlyAccount has shown that the amount of money advertisers have to pay to have their ads viewed by a thousand potential customers, (cost-per-mille (CPM) of social media ads) has significantly dropped by 30 percent year-over-year.
This is even as figures have shown that over the past five years, brands and companies have spent $800bn on social media ads, with two-thirds of Gen Zers and almost half of Millennials making purchasing decisions based on social media ads, it’s no wonder they keep pouring money into this type of advertising.
“The average cost-per-mille of social media ads has dropped by 30% year-over-year to $5.33 in the second quarter of the year,” the data shows.
The data indicates that the social media CPM is usually higher in the final quarters of the year, as the increased demand for advertising space drives a surge in costs, and brands compete to win over prospective clients. However, that wasn’t the case in the past twelve months, with the cost-per-mille of social media ads falling for four straight quarters.
According to Skai Digital Marketing Quarterly Trends Report, the cost-per-mille of advertising on social media amounted to $7.53 in the second quarter of 2022. Three months later, this figure dropped to $6.79. The downsizing trend continued between October and December when CPM was usually the highest. Statistics show CPM of social media ads dropped to $6.66 in Q4 2022, showing an 11% drop in six months. Statistics show that 2023 brought another decline, with CPM falling by more than 20% to $5.32 in the first quarter, and the same cost remained during the next three months.
And while the amount of money advertisers had to pay to view their ads by a thousand potential customers dropped by 30% year-over-year, social media ad impressions have increased. According to Skai’s report, the total volume of social media advertising clicks in Q2 2023 was 35% higher than in the same quarter a year ago, meaning social media users view more and more advertising. Still, according to the survey, this is mainly true for passive ads like videos or stories. On the other hand, clicks and clickthrough rates for traditional forms of social media ads continued to decrease.