Facebook is rolling out a bidding system departed from CPC-based and CPM-based ad pricing known as CPA. This type of advertising has been announced on Wednesday and it’s different from the current CPC pricing. CPA or Cost per Action offers more predictability of ad spend as advertisers are allowed to set a price cap only for a certain type of action.
CPA bidding is available through Ads API and it’s currently live on Facebook Page Likes, Facebook Link Clicks and Facebook Offer Claims. This type of advertising is only available in the ads application programming interface for now, but the Facebook may make it available in Ads Manager or Power Editor in the future.
The CPA pricing should help advertisers to define the exact cost of everything they are doing. Besides paying for mere ad clicks, advertisers through CPA bidding system pay only for something that can contribute to them, whether it be Fan page likes or Offer Claims. This type of advertising is also known as Performance Marketing because advertisers are more aware of their ROI (Return on Investment).
Currently, the Facebook CPA bidding is restricted to these three action types. However, Facebook says other actions will eventually be added, such as application installs, video views, post shares, page comments and so on.
In the case an advertiser opts for Fanpage Likes CPA bid, it means the advertiser will pay just in case an actual user clicks on the Like button. It’s an easy way to gain more likes but it’s costly as well, as each like is going to cost the advertiser at least $1. On the other hand, Facebook Offer Claims means paying only in a case a Facebook user claims an offer.
Readers may wonder what’s the difference between a CPA for “link click” and a CPC buy. Facebook states the difference lies in the existing definition of a CPC bid, which is a click anywhere within an ad. This usually includes a click to an external website or internal link to a Facebook page. On the other hand, CPA bidding for “link click” means an advertiser would have paid only for traffic to an external page specifically defined by the advertiser.
Still, some argue Facebook’s CPA system is distant from an actual Cost per Action bidding system. Namely, CPA advertisers can’t link a completion form or actual sale page to their campaign, which is commonly associated with this type of advertising.
Either way, this pricing model is very likely to be embraced by many advertisers, especially by those in the education and financial field. Affiliate marketers are especially going to love this feature as they know advertising is all about return on investment. Most affiliates are tracking their ROI so big companies who aren’t into campaign tracking may be pushed slightly aside.
There have been questions specifically about app installs that wasn’t initially included in the eligible categories. Facebook stated there are still some things which should be tested out. It will be interesting to see app downloads launched soon as there are many mobile ads for iPhone applications. Overall, it will be exciting to see if advertisers are going to embrace CPA as they have embraced CPC bidding system.
Sarah is the Chief for New York Queens Ads Manager. Join her in a Zinzz Hangout.