Whether you’re new to Facebook advertising or an old one, the development of a new campaign begins with the selection of an objective, type of bidding optimization, and event model for billing. Your option for events is narrowed down to models CPC (Cost per Click) and CPM (Cost per Mille or Thousand Impressions). They are powerful but deceptive.
They can offer you a windfall of profit and also, they can suck your budget dry and leave no realistic outcomes on hand — this is the most likely outcome for a newbie.
By default, many people go the CPC route but there are sometimes valid reasons to bid on a CPM basis.
We should understand how Facebook advertising system functions before moving into the difference between cost per click (CPC) ads and cost per thousand impressions (CPM) ads. Ultimately, Facebook’s ad network works on blind auction. Advertisers are bidding to advertise their ads to different audiences. Facebook then shows those ads that perform the best (or produce Facebook’s highest CPM).
CPC Bidding
CPC stands for Cost per Click. The most obvious reason for choosing a CPC bid is that you only get charged when someone clicks on your ads. At its most basic, you can get your ad in front of millions of people but only get charged when one clicks on your ad. You’ll want to be strategic with your targeting on Facebook though. If your ad relevance diagnostics is not up to the mark that is considered good, Facebook would be substantially less likely to show your ad because it doesn’t get paid and you’re taking up space in one’s newsfeed which could be filled with another, more lucrative ad.
As an advertiser, you want to pay for ads that generate results. If you have a low budget ($5 a day or even $20) and you do not have time for optimization, your best bet is to just go along with CPC.
Although an ad optimizer may also use CPC to test their campaigns, at some stage a professional optimizer would be using CPM for extremely high-performance advertising. The reason is that you should never pay less than the bid rate while bidding on a CPC basis.
The big problem occurs if you want to optimize your ads for something like purchases or leads generated on your website. That’s when you’ll have to acclimatize with the CPM bidding.
CPM Bidding
If you select to optimize your campaigns for leads or purchases, you are defaulted into being charged by the impression. CPM bidding is about putting the ad in front of users and believing Facebook would identify the people who are most likely to convert. It is usually recommended for creating brand awareness on a search that flies a bit in the face of conversion or lead optimization.
The only way to maximize your performance above a stated bid rate and figure out the lowest possible bid is to run on a CPM basis.
The reason is that your CPM bid has nothing to do with how well it will really perform. In other words, I might bid $2.00 for 1,000 impressions, but if my click-through rate is incredibly high, my ads could end up obtaining a CPM of $0.20 despite the fact that I bid $2.00.
In turn, my advertising would outperform Facebook predicted bid rates. Keep in mind that if you run CPM campaigns, you’ll need to track your ads closely for two reasons:
1. You could burn through your budget on low-performing ads.
2. Your ad output will decrease over time, which in turn will drive your effective CPM campaign up over time.
Conclusion
If you don’t spend a lot of money on ads, and you’re new to Facebook ads, bidding on a CPC basis is your best bet. It stops you from exposing yourself to low-performance advertising. The real test you want to find out is how to maximize your click-through rate (CTR) in your ads. Whoever has the highest click-through rate (CTR) would prove to be the best performing over time.
9 Types of Digital Advertising
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Top 5 OTT Platforms in India for Advertising
| Name | Active Users |
|---|---|
| Disney+ Hotstar | 38 Million |
| Netflix | 400 Million |
| SonyLiv | 23 Million |
| MxPlayer | 280 Million |
| Amazon Prime Video | 175 Million |
