Facebook Advertising: The Power of CPM

Facebook by Ray-Franco Bouly, on Flickr

Facebook advertising is becoming a necessity, not an option, especially in regional and local markets. Ease of use and the ability to target geographically and behaviorally are benefits associated with using Facebook for advertising, as is reasonable cost-per-click (CPC) or cost-per-thousand (CPM)  pricing. Which of the two options (CPC vs. CPM) should you select? The answer is easy – it depends on your advertising objectives.

The default option when advertising on Facebook is CPC. If your goal is action, for instance to stimulate click-throughs to a custom landing page for data collection or sales, then CPC may be the best option. If the goal of your advertising campaign is exposure and/or branding, then CPM may be your best option. To compare the two, I devised and ran two small test campaigns, both with the same goal: to drive traffic to a business fan page in an attempt to increase the total number of fans.

The results were interesting and somewhat mixed. The outcome of the CPC campaign was not overly impressive, although the end cost was reasonable on both a cost per click basis (75 cents) and in total. Over a five day test period, fan page “likes” increased by four. Personally, I found the metrics generated by Facebook for CPC campaigns to be rudimentary and less than adequate. That is, I desired more information than what was provided.

Using a similar ad and employing the CPM option yielded much better results overall, but at a higher cost per click. The metrics provided when selecting the CPM option were much more desirable than the default metrics provided when selecting the CPC option. The table below shows the results of the second test campaign.

SecondFanCPM

The second campaign resulted in over 500,000 verified impressions when targeting Facebook users 18+ located within 25 miles of the business over a ten day period and 34 clicks. The 34 clicks resulted in 28 additional “likes” on the fan page for a conversion rate of 82.35 percent. So although the CPC rate is higher ($1.47 per click), the benefit of selecting the CPM campaign is apparent when taking the motivated states sequence into consideration (attention/awareness, interest, desire, action). Where else can you reach 1,000 people, targeted geographically and behaviorally, for 9 cents?

Please keep in mind that the two campaigns are as presented: small trials to see which option is preferable.  No A-B testing for ad copy or graphics was performed. But based on the results achieved, the best option (in my opinion) is CPM because of the metrics provided and the full consideration of the AIDA objectives. To be effective, you’ll need to run a variety of tested advertisements with frequency.

How do you plan to use Facebook to advertise your business?

Share

4 thoughts on “Facebook Advertising: The Power of CPM”

  1. Wow this is a great find!

    This is the kind of testing that is needed to show that the ability to target demographic could prove more effective than competing at keywords.

    Look out Google!

  2. Thanks for posting these results. I have seen this go both ways in my testing, but currently is seems that FB is giving priority placement of CPC ads as I am seeing consistently higher CTR using CPC verses CPM with the same amount of impressions from a duplicate ad.

Leave a Reply