What You Need to Know About Facebook’s New CPC Calculation

If your digital marketing activities include Facebook ads, there’s a new change that could affect your ad spend strategy. The social network recently announced it is overhauling how it is defining a click.

As part of its latest API release, Facebook will only measure what is referred to as link clicks. It will no longer include likes, shares or comments in future CPC calculations.

What counts as a link click?

  • Clicks to other websites
  • Call-to-action clicks that link to other websites
  • Clicks to install applications
  • Clicks to Facebook Canvas apps
  • Clicks to view videos on other websites

The social network explained the reason for the change on its Facebook for Business page:

“It’s designed to provide measurement that’s more closely aligned with how advertisers are bidding so they can better optimize their campaigns against their stated goals.”

The latest release should help you improve your ad spend to a specific goal, such as driving traffic to your website. You’ll also be able to better understand how your ads perform against your objectives.

Keep in mind, both your Cost Per Click (CPC) and Click Through Rate (CTR) figures will be affected by the change. Your campaign performance will likely generate fewer clicks at a higher cost once engagement clicks are removed from the equation. Facebook argues the ads are more valuable because it counts only the clicks you define in your ad objectives.

Digital marketers with specific campaign objectives will likely agree. As we mentioned in a previous post, Facebook likes and shares are not directly tied to revenue. So, why be charged for an action that does not lead to improved bottom line?

The move to objective based campaigns

Facebook is not the first social media platform to move to performance based measurement. Twitter announced a similar move a year ago with its objectives based campaigns, reports and pricing. In this model, marketers only pay for specific outcome clicks rather than when someone favorited an ad.

If the outcome of Facebook’s new release is similar to Twitter’s, digital marketers should see a much better return on their ad spend.

“Objective-based pricing (on Twitter) reduced our cost per link click by over 40% quarter over quarter, making our ads more efficient, driving higher lead conversions.” -James Carroll, online marketing coordinator of Tableau

What does this change mean for engagement clicks?

Marketers can still choose to target ads and bid for engagement clicks (likes, shares and comments) by choosing other optimization options, however, the actions won’t be tracked in the new CPC algorithm.

Facebook also points out a high number of likes and shares is a signal of high quality content which helps ads perform better at auction. Tracking performance of campaigns is a huge incentive for marketers to understand how advertising sources count success.

When will the new CPC calculation take effect?

If you buy directly through Facebook’s interface including Power Editor and Ads Manager, Facebook will share information through the interface when the change goes live, although it’s estimated to be a few weeks away.

If you buy ads through the Facebook API, you can start buying ads with the updated CPC right away. If needed, marketers can continue using the old definition through the API until October 7th, after which only the updated CPC will be available.

Across social networks, the trend away from building hoards of followers for the sake of the brand, and toward a model similar to display marketing will continue. In order to optimize your spend, consider a marketing analytics platform that can deep dive into the data of your social media link clicks and show you where you are seeing success. Only then can you optimize your ad spend and increase performance in the ever-evolving world of social media measurement.

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