Offering advanced targeting capabilities at a relatively low cost, Facebook’s ad platform can be a highly efficient means of reaching your target audience.  When setting up a Facebook ad campaign, you’ll have to choose between two pricing models: CPM (cost-per-thousand-impressions) and CPC (cost-per-click).  In theory, your choice of pricing models would simply depend on the goal of your campaign.  However, depending on the competitive nature of your niche, your decision may not be that simple.  Ultimately, you need to determine for yourself which model makes the most sense for your business–and that will require testing.

Facebook’s original intent in offering two pricing options was to allow advertisers to essentially pay for “goal completions.”  If your goal was to drive click-throughs to your website, you’d bid on clicks.  And if your objective was general exposure, you’d bid on impressions (read Facebook’s official statement).

Let’s say you were running a brand awareness campaign, the goal of which being general exposure, or ad impressions.  While the average advertiser would choose CPM without a second thought, you are not the average advertiser.  Your marketing savvy leads you to perform a test in which you run two versions of your ad, identical in every way except for the pricing model.

Mathematically speaking, what circumstances could prove the CPC model more successful for your brand awareness campaign?  Ultimately, if the following expression holds true:

I*CPC*CTR < (I/1000)*CPM, where

• I = impressions
• CPC = minimum CPC bid required for Facebook to run your ad
• CPM = minimum CPM bid required for Facebook to run your ad
• CTR = target audience’s propensity to click on your ad (fancy way of saying click-thru rate)

The expression could be satisfied if CPC and CTR are low or if CPM is high.  This has proved true in campaigns that I’ve managed.  There were relatively few competitors, and so CPC was low.  Furthermore, the CTR on my ad was relatively low.  The result was millions of inexpensive impressions.

You’ll only know if you test, and the Facebook ad platform is excellent testing ground, being both inexpensive and easy to use.  So go run an experiment.  It’s fun, and it could save you precious advertising dollars.

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