You may have heard that Facebook is donating billions of dollars to cure “all diseases”. It’s a lofty goal that your ad spend – and Facebook’s ad format agenda – is helping to fund.
…. With year on year ad revenue in Quarters 1 and 2 of 2016 up 57% and 63% respectively, while year on year users grew at 14.8% and 14.9%. The major factor boosting Facebook’s revenue is its shift of focus to video and rollout video preroll ads. As Facebook said in its Second Quarter 2016 Results, it’s moving “towards a world where video is at the heart of all our services” ... and a world they don’t need to work as hard for your ad spend.
So why push video so aggressively? To get away from CPC
Facebook constantly changes the details of or entirely replaces ad formats at such speed that their own staff, let alone advertisers, can’t keep up (to the point that trafficking dashboards trump Facebook’s often outdated Ads Guide on spec briefing and the Advertiser Help Centre often provides conflicting information). On top of this, Facebook’s ad formats are pushing away from CPCs altogether with only 4 of 13 giving advertisers the option to bid on a CPC instead of a CPM, CPV or engagements in the form of comments, likes, shares etc.
CPM / CPV / CPC – What’s the difference?
CPM – Cost Per Thousand Impressions: relies on creative that works to deliver strong engagement, if your creative over-performs you get better than expected value, but given the clutter in channel and declining engagement rates across a number of key demographic segments more often than not the math doesn’t work out.
CPV – Cost Per View: where you pay whenever a video plays for 10 seconds or more (formerly 3 seconds), except between measurement discrepancies, and the fact that the vast majority of views play out without audio and without any kind of viewer engagement (beyond not scrolling down the page fast enough) this is typically a bad buy, compared to any other online video channel. Despite this, agencies have been making healthy coin creating video content specifically for Facebook (i.e. Subtitled, Text heavy, playing to (originally) a 3 second rule which helps Facebook make more money but generally doesn’t translate into better results for clients).
CPC – Cost per click: an oldie but a goldie, you don’t get the cream of the crop when it comes to the RTB auction, but you get what you pay for regardless of how attentive the audience is that morning, noon or night… what level of competitor activity is competing for the same audience and how engaging the creative is.
... And why does this matter?
Facebook wants you to buy CPM, it guarantees them revenue with the least effort on their part. Most agencies don’t do the math and go with the flow. But smart advertisers go CPC first, last and always to make Facebook put the work in to deliver a result that is meaningful to the client, ultimately driving the best ROI Facebook can deliver.
So next time you’re given the choice, either go CPC or make a donation directly to your favourite charity. Zuck’s is a good one.