Wow! Facebook Completely Changed the Way Advertisers Are Charged
Are you advertising on Facebook? You probably should be, since we all know that organic reach is dead, and everyone including your mother and her close friends are spending a significant amount of time on the social platform each day.
Wipe the sweat away from your forehead, and stop running towards your computer to pause all of your Facebook campaigns: this is actually great news and will likely improve your ROI.
Facebook, similar to AdWords, operates on a cost-per-click (CPC) model, which previously charged for every action including clicks to links and apps, likes, shares, comments and even “continue reading.” Yesterday, they announced that in order to help advertisers better understand how effective their ads are in driving goals, they’ll only be charging for clicks to websites and apps. Hoorah!
So, what counts as a click again? Facebook clarified, “we’re updating CPC to only account for what we call ‘link clicks’ – i.e., the clicks related to certain ad objectives.” These include clicks to visit a website, call-to-action clicks, clicks to install an app, clicks to Facebook canvas apps, and clicks to view a video on another site. Basically any clicks that take your off the page onto another site (or into apps).
What About the Advertisers That Value Ad Engagement (likes, shares, comments, etc.)?
What it comes down to is the fact that likes, shares, and comments are not revenue-generating actions, and often mean nothing to the majority of advertisers.
Who wants to pay for likes and shares anyhow? It’s simply more logical to pay for traffic that is actually being directed to your website or an app that you desire your user to install. It will make the life of the advertiser easier when evaluating spend and effectiveness of the campaign as well. “Taking engagement actions out of the calculation makes it easier to evaluate performance-driven campaigns and set bids based on those desired outcomes,” says Marketing Land’s, Ginny Marvin.
But what about those advertisers that are focused on branding and reputation? Luckily these advertisers will still be able to target ads and bid for engagement, but these actions will no longer be tied to the CPC. “If an ad has lots of likes and shares, that’s a signal of high-quality content being delivered to the right people,” says Facebook. “It’s also important to remember that having lots of likes and shares on an ad or post is rarely and end unto itself. The most important factor for an ad’s success is bidding for the correct business objective.”
Facebook makes a valid point here! All too often advertisers are far too focused on followers, likes, and shares, when at the end of the day if they’re not getting traffic and conversions on their site, their main business objectives are not being met.
Twitter also made a similar change last year with objective-based campaigns.
Will Advertisers Really Save Money?
At the end of the day, most likely. CPC’s will be higher, and CTR is likely to decrease when likes, shares, etc. are taken out of the CPC equation. With that said, an advertiser will only be paying for more valuable, action-oriented actions, which will likely result in higher returns. So with higher returns and no longer having to pay for simple engagement actions, it’s likely that most advertisers will save and make more money.
“Advertisers should be happy because they want to back these buys into actual metrics – no one has been able to figure out the value of a like or a comment so it makes sense to pull that metric out,” entrepreneur Krishna Subramanian, told Business Insider. “Which will drive up conversions with clicks that truly matter and create more competition for true CPC campaigns because FB provides tremendous scale.”
Once these changes are implemented it’s critical to keep in mind that comparing past historical performance with current performance will become illogical. Luckily, “The new numbers should be a truer reflection of how their campaigns are meeting business performance objectives without being muddled by actions better associated with branding goals,” says Marvin.
What's the Timeline on These Changes?
Well, that depends on how you buy ads. If you buy ads directly through Facebook’s Ads Manager or Power Editor, keep an eye out for any updated CPC implementation news, which should be coming within the next few weeks. Facebook has ensured that they will be providing messaging within the interface once the change has occurred.
For advertisers buying through a Facebook Marketing Partner, Facebook recommends speaking with your Marketing Partner to understand when they’ll be implementing the new API with updated CPC.
Lastly, those that buy through the API can begin buying ads with updated CPC today!
I’m curious, what are your thoughts on Facebook’s new CPC model?