Post by Ian Hopkins, Media Director, and Nonie Carson, Associate Manager, Marketing
Facebook just announced a cost-per-click (CPC) update to its ad units. Previously, advertisers were charged for any click within an ad unit, including likes, shares and comments. Now, advertisers will only be charged for “link clicks” (meaning app downloads and outbound clicks).
This update is great news for advertisers as they can now test, optimize and invest budget with more granular precision, while paying only for the actions that matter most. It is available today through Facebook Ads API, V2.4. The “old” Facebook CPC will continue operation until early October, at which all advertisers must update to the new CPC.
This update comes in the midst of social platforms racing to mature ad offerings that better suit advertisers’ needs. Paid ads on social media platforms have proven to be a highly effective channel to engage and convert consumers. More brands are turning to social to reach the vast social media audience and create highly personalized ad experiences powered by user insights.
Customer intent on social platforms differs depending on whether the user (1) clicks on a link or (2) engages with a post (e.g. shares or likes). A link click is usually more indicative of intent to buy, while a share/like is more indicative of intent to participate with the brand. Facebook’s latest CPC update is addressing the importance of differentiating strategy and budgets between (1) link click and (2) engage to better drive performance.
PERFORMANCE IMPLICATIONS FOR BRANDS
ROI for performance goals: Brands with performance (leads, sales) objectives will benefit as they will only be paying for clicks that align with those objectives. Brands can better optimize and test ads based on actions that are most meaningful to them.
Better defined campaign goals: Updated CPCs will push all advertisers to establish clear KPI goals and allow for better optimization against stated goals
Improved user experience: With better defined ad objectives, users will benefit from advertisers focusing efforts on clear call-to-actions and more effective copy that resonates better with personal interests. Brands should expect to see improved emphasis on the post-click ad experience
Expect higher CPCs and lower click-through rates (CTRs): Facebook warns that by separating out clicks, CPCs might increase with less click volume. CTRs will most likely see a decline as well, as clicks will no longer factor in actions that aren’t directly tied to the brand objective.
Loss of benchmarking data: As the definition of a click has changed, historical performance will not be comparable. This could be troublesome for brands that measure success based on historical performance.
While this update is ultimately positive for brands looking to drive user-actions, initially, higher CPCs and lower CTRs may be a turn-off for advertisers. However—in the longer-run as advertisers realize higher ROI—performance and spend could accelerate.
To learn more about Facebook CPC updates, please contact your performance account team today.