Facebook Ads and When to Use CPC vs. CPM
Though the value of Facebook’s advertising platform has, especially recently, come under fire by some businesses that are utilizing that platform, studies have proven time, and time again that it is effective. Undoubtedly, the versatility of Facebook’s advertising platform — and the ubiquity of Facebook as a whole — has given advertisers a slew of great options when it comes to driving traffic towards their own Facebook brand pages or their own products.
But Facebook also gives advertisers the ability to choose between three different advertising models: cost per click (CPC), cost per mille (CPM/ cost per 1000 impressions), and optimized cost per mille.
Using the CPC model, advertisers will only pay when an ad that they run is clicked on. On the other hand, using the CPM model, advertisers will pay Facebook a small sum for every 1,000 impressions that their ad gets. Though that sounds like a lot, it really isn’t, because an ad could very easily run over a thousand times without being clicked.
The pricing of optimized CPM, though, is controlled by Facebook based on what their algorithms have determined to be fair in driving actions to a page, and this option can often get very expensive very quickly.
So, it would appear that using the CPC model is, in almost every case, a safer bet. And in most cases, that would be true. CPC is the ‘safe’ bet.
But that doesn’t necessarily make it better. Here are some key differences between CPC or CPM models in order to help you determine which one might be right for you.
Price
Obviously, an important thing to consider when first beginning to advertise on Facebook is the sort of budget that you have in mind, plus the pricing of ads relative to that budget. Using CPC is almost always more expensive with regard to the bid price, simply because you pay only when someone clicks on an ad of yours.
But CPM, on the other hand, can be hugely cost effective in the right hands. Because you are strictly paying for impressions, if you’ve developed an ad that has a high click-through rate, you could potentially get clicks at a price that would be significantly less than paying CPC at even the lowest end of the spectrum.
Urgency
Another thing to consider is how quickly you want your ads to be placed. CPC advertising generally takes things like reach into account, and even if you bid well within the CPC price-range it can be difficult for ads — especially those with low reaches and very specific targets — to get placed. In that sense, it wouldn’t be uncommon for newer CPC ads to only get a few hundred impressions and minimal activity within the first few days, or some to not even place at all. Obviously, though, all of this is dependent upon such factors as reach and target, and can vary a lot. That’s why it’s important to test out different variables in order to find a good medium between price and placement.
CPM, on the other hand, will generally place ads pretty quickly and, depending on your bid prices, might also blow through a budget very quickly. But of course, if you’re trying to get an ad placed quickly and aren’t too concerned with fine-tuning the ad in order to ensure high click-through rates, CPM is an excellent way to get your ad placed. That said, CPM doesn’t guarantee clicks, so an ad could very easily be displayed a few thousand times and receive minimal interaction.
And then there are optimized-CPM ads, which will also be placed pretty quickly. But again, these can become very expensive, very quickly. Still, these ads are generally optimized to receive high like rates and, if that’s your ultimate target, aren’t a terrible place to start. Unless, of course, you’re on a very tight budget and want to get likes or other actions on the cheap.
Cost Per Action
Finally, easily the most important thing to consider with regard to Facebook ads is how much it costs to get a user to complete an action (CPA). This could be as simple as getting a page like, or as complex as getting someone to beta test a new application. But for any business, the end goal is likely more than just getting someone to click on a link to a page.
Though CPC guarantees that you will only pay when an ad is clicked on, that same model doesn’t necessarily guarantee that that user who clicks on your ad will eventually follow through with a page like or vote, or whatever your end-goal may be.
So, for example, if you’re paying .50 for a click on an ad, and that ad is clicked 8 times, but your page only receives 2 likes, you’re paying $2 for a like. On the other hand, if you pay for 8,000 impressions using the CPM model, but your CPM is only .30 per thousand impressions, and your page also receives 2 likes, you’re only paying $1.20 for a like. Not bad.
Ultimately, your CPA will be determined by what your end-goal is — if you’re trying to sell some cars, your CPA will be much, much higher than a few dollars, obviously — and how compelling the ads you’re using are.
Conclusion
For most businesses, starting off by using the CPC model might be better if not just to start becoming familiar with Facebook’s advertising model. On the other hand, CPM can be hugely cost effective when you figure out how to get the highest click-rates relative to the number of impressions, and optimized CPM too can be hugely effective (although, typically, much more expensive).
What is your experience using the CPC model vs. the CPM model?