Facebook Announces Cost-Per-Action Bidding
Facebook is hard at work to deliver and prove value to advertisers. Its recent announcements about third-party data integration in ad targeting and offline conversion tracking are all part of that. And today, Facebook is introducing a new way to bid for ads on the site, on a cost-per-action (CPA) basis.
Eventually, though the timing isn’t yet certain, all Facebook ad units will be available via CPA. However, the company is introducing the new option in selected ad categories for the present.
CPA bidding (on a global basis) is available today through its ads API. CPA will make its way to the Power Editor and Ads Manager in the near future. When it does, or soon thereafter, CPA will become available broadly on the full range of Facebook ad types.
Today, marketers will be able to do CPA bidding on three types of ads or actions:
- Page Likes
- Offer Claims
- Link Opens/Clicks (specific click-throughs [e.g., to a product profile page] the marketer wants)
CPA will operate as a maximum bid. As with search, marketers may actually pay less than their max bids in practice. Thus, if you value fans at $1.50 per fan, you can simply bid that amount to acquire them — but may actually pay less. Facebook says this benefits marketers by offering more “predictability” in their ad spending.
CPC ads/pricing will survive and is not being replaced by CPA, though all marketers will be included in the same auction.
Facebook told me today that in many cases CPA ads will deliver better value to marketers than CPC. This is largely because of the Facebook’s predictive modeling algorithm that it uses to expose CPA ads to the right audiences and thus maximize the probability of success (and revenue for Facebook).
Actions/conversions for billing purposes will be those that happen within 24 hours of an ad click. In some instances, the click and the CPA action are one and the same (e.g., Liking a Page on Facebook). In other cases, there may be an initial click and then the CPA event (e.g., clicking an Offer ad and claiming the offer).
I asked specifically about app downloads and installs and why that wasn’t initially included among the CPA eligible categories. It’s a logical category for CPA, and a great many mobile ads on Facebook are for apps. Facebook said there were some things still to be worked out, which is probably also true for a number of other ad unit types.
While it’s premature today, we’ll quickly start seeing columns and posts that ask: CPC vs. CPA on Facebook, which one should you use? The continuing argument for CPC may be difficult to make — unless there’s no “action” to take, as in a pure brand awareness campaign, but that will be rare.
What are your thoughts on the outlook for CPA ads on Facebook? Would you shift all your Facebook advertising over to CPA bidding?