Last month, I wrote a post on an agency blog about how to use Facebook advertising to promote your brand. The post in itself was very basic but has acted as a good reference point in my communications with clients. After managing several social media marketing campaigns on a freelance level and through the agency I work for, I’ve run into a specific question more often than not: Should I use CPM or CPC for Facebook advertising? I often enjoy giving definitive, absolute answers, but the one I’m most comfortable with right now is “it depends”.
Just as a lot of factors go into writing compelling sell copy, choosing your creative, and targeting your audience, a decent amount of thought should go into the payment method you choose for advertising on Facebook. With the slow decline in the effectiveness of online display media and ever-so-slowly recovering economy, a lot of marketers are paying close attention to how much they spend on the medium compared to what they get in return.
On a CPM, or, cost per mille pay model, you pay a flat fee (pre-determined by Facebook) for 1,000 impressions. For CPC, it’s just the opposite- you only pay your desired bid amount when a user clicks the advertisement. I like to think of it this way: CPM follows a “throw it against the wall until it sticks” philosophy whereas CPC is more strategically aligned with a “Don’t shoot until you see the whites of their eyes” mentality (Side Note: I majored in Political Science, please excuse the dorkiness).
The biggest factor in determining whether you should use CPM or CPC for Facebook advertising is defining your goal and online brand strategy. If your goal is to get as many people seeing your ad as possible with no regard for click through rate, then a CPM model is generally recommended. If you are advertising for the sole person of selling products, services, or generating leads, then CPC may be the best bet. But, like most things in online marketing, nothing is that simple.
To get a better idea on whether to use the CPM or CPC model for advertising on Facebook, it’s best to learn by experimentation. A modern trend in SEO involves experimenting with Google AdWords and PPC to test the popularity and record relative impressions before starting your keyword research. Using a similar approach, I recently started a Facebook advertising campaign on a CPC pay scale. After 2-3 weeks of measuring impressions, recording clicks, studying CTR, and monitoring ad spend, I came to the conclusion that you can easily determine whether to use CPM or CPC for Facebook advertising by following determining your maximum effective CPM:
| Maximum Effective CPM = CPC * CTR * 1000 |
As an example, let’s take an ad that’s running at $0.10 CPC and experiencing a 2% CTR:
| .1 * .02 * 1000 = Maximum Effective CPM = $2.00 |
For this ad, it would be cheaper using a CPM model on any CPM below $2.00.
Using analytics to measure the success of your online marketing campaigns will save you time, money, and a whole lot of headaches in the long run. If anyone else has tips and advice on whether to use CPM or CPC Facebook payment models, feel free to discuss in the comments!
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