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Facebook Dumps “Likes” In New CPC Calculation To Focus On Performance Outcomes
New formula won't take engagement actions into account when defining CPC.
The once regaled Like is getting another kick in the shin. Facebook is changing up the way it calculates cost-per-click to an approach that moves past its roots as a place for brands to win popularity contests by garnering “likes” to one that puts business performance objectives first.
For advertisers that want to drive app installs or traffic to their websites, the cost-per-click (CPC) will no longer take into account engagement actions such as comments, likes and shares. The calculation will focus solely on so-called “link clicks”.
What counts as a link click?
These are the “link clicks”, which Facebook considers related to certain ad objectives that should impact advertisers’ bidding strategies and will be included in the new CPC definition:
- Clicks to visit another website
- Call-to-action button clicks that go to another website
- Clicks on “Call Now” buttons in click-to-call ads
- Clicks to install an app
- Clicks to Facebook canvas apps, which are native to the site
- Clicks to view a video on another website, such as YouTube (Clicks on a video uploaded to Facebook is still considered an engagement click.)
To be clear, marketers can still choose to target ads and bid for engagement clicks by choosing other optimization options, those actions just won’t be tracked in the new CPC calculation.
The blog post makes the shift in thinking clear, “It’s also important to remember that having lots of likes and shares on an ad or post is rarely an end unto itself. The most important factor for an ad’s success is bidding for the correct business objective.”
A More Precise View For Performance Advertisers
The move makes sense and was apparently advertiser-driven according to Facebook’s head of ads product marketing for interfaces and newsfeed Richard Sim by phone. Taking engagement actions out of the calculation makes it easier to evaluate performance-driven campaigns and set bids based on those desired outcomes.
“The new CPC will enable advertisers to be more specific about the types of ads they use and pay only for clicks that lead to their website if that’s the marketing objective they have in mind,” said Sim.
“If you think back, a lot of advertisers thought of Facebook only as a social platform and were strictly engagement focused. Over the past few years we’ve really been focused on driving business results. The transition to clicks being only link clicks is a big step in this transition.”
Twitter did something similar with its move to Objective-Based Campaigns last year, and Google’s Display Campaign builder in AdWords also walks advertisers through a particular campaign-creation path depending on the marketing objective they select.
Campaign Performance: Comparing Apples & Oranges
Once this new approach goes live, advertisers won’t be able to simply compare current campaign performance to historical performance. Without the context of knowing when the change goes into effect, Facebook campaigns performance could appear to take a nosedive.
Campaigns will likely generate fewer clicks at higher CPCs once engagement clicks are removed from the equation. “The numerator is different,” as Sim explains.
But for performance advertisers, 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.
Back-End Targeting & Bidding Optimizations
Once an advertiser chooses an objective for a campaign, it drives a number of options for advertisers in ad creation. The system’s ad serving and optimization are then informed by campaign objectives.
“There is a lot of stuff on the backend that’s much more simple when we understand the objective,” explained Sim. “People that engage with an ad versus click on it are often very different.” Engagements are public actions that show others what you care about. Clicks, however, are private. Nobody knows whether you clicked on an article or an ad on Facebook.
When a campaign objective is selected, Facebook’s ad engine assesses every impression and makes a prediction on how likely a user is to engage or click, based on past behavior among other factors, to determine which ad should be served and at what CPC.
Wednesday’s announcement coincides with the new API release. Developers will have the usual 90 days to make adjustments and build for the new API. If you’re working with a Facebook Marketing Partner, check with them to find out when they’ll be implementing the new API.
The update to the interfaces — Power Editor and Ads Manager — is probably about a month away, said Sim. Messaging will be added to the interfaces about the change when it goes live. Sim also added that the SMB team will be doing outreach to help advertisers adjust reporting and expectations after the update.
The final cut-off for using the old API and CPC definition will be October 7.