Gupta Media: Facebook ad prices, measured in cost per thousand impressions, rebounded from a $1 monthly average last spring to almost $5 in November
Sylvia Varnham O'Regan / The Information : Tweets: @joshua_sisco , @randfish , and @lauramandaro See also Mediagazer Tweets: Josh Sisco / @joshua_sisco : Great story from @SylviaVarnham about increasing ad prices on facebook and google. Will only add to concerns about market power https://www.theinformation.com/ ... Rand Fishkin / @randfish : Digital ad prices took a dive at the start of the pandemic last year. The Information reports that they rebounded to hit all-time highs: On Facebook: - $2.55 avg in Jan - $1.00 avg in April - $8.16 avg in Nov (subscription req'd: https://www.theinformation.com/ ...) https://twitter.com/... Laura Mandaro / @lauramandaro : It's more costly to buy a Facebook ad today than it was before the pandemic, according to @guptamedia data. Great for $FB and other internet ad platforms, not so much for the tech co's that spend big on marketing. Story via @SylviaVarnham https://thein.fo/... https://twitter.com/... See also Mediagazer
Context & Ripple Effects
The rebound is the mirror image of the trough this same data source charted a year earlier: Gupta Media recorded Facebook's worldwide CPM hitting an all-time low of $1.95 in April 2020, right after Facebook itself reported a "significant reduction" in advertising demand over late March. Cheap impressions were a demand shock, not a strategy change.
What makes the recovery worth watching is that it stacks on top of an older pattern: Facebook has twice tightened its own ad supply before — the 2018 News Feed changes that pushed prices up and post-GDPR targeting limits that had advertisers re-examining their spend commitments back in 2018. Each time, less inventory meant higher clearing prices.
First-order effects
- Advertisers who built plans around sub-$2 CPMs in spring 2020 now face roughly five times the cost for the same Facebook impressions, forcing media buyers to re-rank channels by effective cost per outcome rather than headline CPM.
Second-order effects
- As Facebook inventory reprices upward, rival platforms absorb the overflow — a dynamic that shows up later in FactSet's Q1 2022 survey, where Google was expected to grow ad revenue far faster than Meta ($55.1B vs. ~$27.5B), and in advertisers shifting budgets to Google, Amazon, and TikTok.
Third-order effects
- If every supply contraction — algorithmic feed changes, privacy rules like GDPR and Apple's ATT — translates into higher prices on the dominant platforms, ad pricing power concentrates further, feeding exactly the market-power concerns regulators have raised about the Google-Meta duopoly at the center of social advertising.
The trend: Digital ad pricing is increasingly set by platform-controlled supply cuts rather than raw demand, with each squeeze lifting incumbent prices and pushing marginal advertiser budgets toward competing networks.