Facebook advertising strategies: CPC, CPM and when to use them

By: | April 14th, 2013

If you are reading this post, then you probably have some kind of experience in marketing on Facebook, Google, or other online advertising platforms. However, if you’re online marketing rookies and have never heard about such terms as CPA, CPM, CPC, etc. that will be discussed extensively throughout this post – you had better do your homework; Google these topics, learn the basics and come back for some advanced material.

Facebook Advertising Strategies

Which advertising model on Facebook is more efficient – ROI-wise?

In spite of many different opinions among advertisers regarding the efficiency of advertising on Facebook, one can hardly doubt the fact that planning your advertising strategy correctly can generate the maximum ROI from a campaign.

This post will discuss the CPC and CPM models of Facebook advertising; specifically, it will talk about the differences between the strategies, the cases in which one should be chosen over the other, and cases in which they should be integrated.

The mistake most advertisers make about CPC and CPM

For those of you who don’t remember what CPC means (also called Pay Per Click), it is an advertising strategy in which the publisher of an ad has to pay for every click on the ad. No clicks mean no charge. In contrast, CPM, an older advertising method, is based on payment for a certain number of views of an ad. For every 1000 views, the advertiser is charged a fixed amount – no matter how many viewers actually proceeded to click on the ad.

Most of the people who advertise on Facebook opt for the CPC method. However, this is not always the right thing to do. The common rationale behind this choice is this: “if someone has clicked on my ad, it means that this person has seen it for sure – therefore it makes sense that I pay for this click. But if I choose the CPM method, my ad may simply appear on the side of the screen without the potential target customer paying any attention to it; this person is probably busy reading is/her friends’ status updates. Therefore, since this person hasn’t even seen it – why should I pay for it?!”

This kind thinking is generally correct – and in fact, it was this thinking that lead to the development of the CPC model in place of the good old CPM model. However, it should also be taken into account that strict proponents of the CPC method may miss many opportunities that could come their way via CPM. However, before we enter a deep discussion about the merits of each strategy, here are two rules of thumb that will help you choose between the two methods in a matter of seconds:

  • If you want to generate more traffic to your website – choose CPC.
  • If you wish to have your brand exposed far and wide – choose CPM.

Here’s why: an advertiser will do well to choose CPC if the goal of his/her campaign is to bring traffic to website – traffic that is which is brought there to perform a certain action. This action can be anything from leaving contact details, subscribing to the website’s newsletter, and of course, purchasing a product or a service from the site.

However, the main idea here is that the person who viewed the ad has to perform several steps in order for the campaign to succeed. These steps will usually include:

Clicking on the ad –> entering a landing page –> leaving contact details –> subscription/purchase

Since the advertiser’s purpose is to generate traffic and since generating traffic demands clicks on the ad – the advertiser should opt for a payment method in which payment is given per click.

However, when the campaign’s goal is branding or sending out a message to a specific group of people – the advertiser should choose CPM and pay per 1000 views. Why? Because clicks or no clicks, just publishing the ad means that advertiser will reach the goal and the campaign will be successful.

For example, let’s say that I own a website that sells tickets to music shows and the goal of my campaign is: “sell tickets to Madonna’s concert next week”. As far as I’m concerned, until the potential buyer doesn’t visit my website, there is no chance that I’ll succeed in selling him/her a ticket; therefore, this situation calls for the CPC method.

If, instead, I’m Madonna’s agent, and I want to tell Facebook users about her new album that came out a week ago, I would prefer to use CPM. In this case my goal is branding, and I want my ad to reach as many viewers as possible. I want Facebook users to know about the album so that they go and buy it in a music store. In this case I will gain nothing if I focus on clicks, since I’m not interested that these people buy the album from me.

Another example for when using CPM may be better is when I intend to have a fundraising event at a certain date and I want as many people as possible to attend this event. Since this event does not demand registration in advance, I’ll choose CPM as my advertising method and state the exact location and time of the event very clearly on my ad. This way, I don’t actually need Facebook users to click on my ad in order to reach my campaign’s goal; it’s enough that they’ve seen it.

Integrating CPC and CPM: when should you do it?

So far, we have talked when CPC should be used over CPM and vice versa. However, when should the two strategies be integrated to produce maximum results?

Many times, when promoting a new product, advertisers want to reach both of the goals discussed above (branding and sales). This, for example, is a situation in which using both types of advertising would be effective; in this case, a CPC campaign and a CPM campaign should be run at the same time.

Let’s say Nike wants to tell its fans about its new basketball shoes, which are going to become the shoes worn by all he big-name basketball stars in the upcoming season – Kobe Bryant, Shaquille O’Neill and Michael Jordan. Nike puts up a CPC campaign in order to attract its fans to visit its online store and encourage them to order the shoes from the store. In order to increase the chances that people will click its ads, Nike makes the proper preparations beforehand: it decides to inform its fans of the new shoe’s advantages and brand it as “the shoe of champions”. To this end, Nike puts another campaign, this time a CPM campaign, where it shows photos of NBA stars wearing the new shoes.

Both campaigns are designed with the same goal in mind: sell more shoes. The purpose of second campaign (the CPM one) is to prepare the ground and do some branding action, and the first (CPC) campaign is meant for actually selling the shoes.

Final words…

We truly hope that this post helped you understand how and when you should use CPC and CPM strategies for Facebook advertising. Please stay tuned for our next posts!

Additional great resources about Facebook advertising:

Shuki Mann Google+

Shuki Mann is the CEO of Boo'ot Strategic Digital Marketing, for small and medium-sized businesses. Boo'ot specializes in customer-oriented marketing, such as Google Analytics, Google AdWords, SEO, landing pages, etc. Learn more at our blog (Hebrew).

3 thoughts on “Facebook advertising strategies: CPC, CPM and when to use them”

  1. Gidi Farkash says:

    Nice article. Recommended to anyone with even a bit knowledge of advertising strategies in the web.

    P.S.
    In the paragraph that starts with “Let’s say Nike….”, there is a mistake. It should start with “CPM campaign…”

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    1. Shuki Mann says:

      Hi Gidi!

      Tnx for the comment.
      We will fix it ASAP

      Shuki

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  2. Wily R says:

    Facebook ads are terrible, the cpcs are way to high and the conversions are awful. I don’t know how anyone gets it to work there. I think distribution is the key element of marketing. Instead of Facebook, try Outbrain or Adblade. Both have serious scale and great conversions.

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