Until now, advertisers on Facebook have only been able to bid on campaigns on either a CPC or CPM basis. While this has been an effective way for businesses and brands to bid for ads, there is no guarantee that clicks and impressions actually lead to conversions. To capture more performance marketing spend, Facebook is introducing a new option to bid on a cost-per-action (CPA) basis.
CPA bidding is available today on a global basis through Facebook Ads’ API, and according to Marketing Land will soon be available in the Power Editor and Ads Manager. Currently, marketers are 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)
This new option to bid on a CPA basis will operate as a maximum bid, but as with all CPA bidding, advertisers may actually pay less than their max bids. Facebook says this benefits marketers by offering more “predictability” in their ad spending. This option is also better than bidding with CPM or CPC, as bidding with CPA guarantees lead generation and facilitates conversions. By paying for an actual action – such as an offer claim, rather than just a click on the offer – advertisers are assured that there is actual value in their campaigns. Despite all the hype of social advertising benefiting “brand awareness,” the bottom line of any campaign should be to produce a positive ROI. With this new CPA option, advertisers on Facebook can now actually see – and only pay for – ads that perform well and lead to a positive ROI.
Of course, if you’re still convinced that CPC and CPM bidding is better for your brand, don’t worry – Facebook isn’t replacing these options with CPA. Advertisers will still be able to choose these options when creating campaigns.
Stephen Darori on Facebook Technology 