Meta Ads operates on a CPM-based auction where ad delivery is determined by a combination of bid amount, estimated action rate, and ad quality score, meaning a highly relevant ad from a smaller advertiser can outperform a higher-spending competitor with poor creative. CPMs fluctuate based on audience size, competition level, seasonality, and creative quality, Q4 typically sees CPMs 30–50% higher than Q1 due to holiday advertiser competition. Understanding auction dynamics helps advertisers make smarter decisions about audience size, creative investment, and bidding strategy. Publishers and affiliates buying Meta traffic must account for CPM volatility when calculating campaign ROI.