Your optimization strategy has a big influence on the success of your advertising campaign on Facebook. It is, of course, only one of several key levers that influence success on Facebook with others including ad placement, ad format, and audience targeting. Bid optimization on Facebook has undergone a transformation since it first launched. Previously, cost per click (CPC) was the only option, but now there is a suite of bidding options that improve various marketing objectives, be those brand, direct response, mobile app install, or app engagement.
Facebook Bid Types Have Evolved to the Benefit of Marketers
The first type of bid is CPC. The strategy for bidding here is most similar to a paid search where you are bidding on clicks and optimizing on clicks. This method is useful when you are aiming to drive high-volume traffic to your website. But the system doesn't care whether an action has taken place or resulted in a sale.
Then came CPM or 'cost per thousand impression'. In this case, you are bidding on impressions. This bid type is common in the display world. This is most useful when you want to maximize your reach. Unless your campaign is very broad, it is recommended for use with Facebook's Custom Audiences, as these audiences are typically highly qualified. For example, email lists from loyalty programs or search intents from your paid search campaigns are usually very effective.
Cost per action (CPA) is based on your customer taking an action within the ad itself such as a mobile app install, a page link, or an offer claim.
The most recent bidding innovation by Facebook is oCPM, or optimized CPM. And I use the word 'innovation', because here, Facebook pushes the envelope with people-based marketing. With mobile consumption expected to overtake desktop this year by 18 percent, you can see why digital networks like Facebook are growing rapidly. They have better profile data than any other traditional ad network. And because the profile is uniquely identifiable, they can optimize effectively across different devices.
oCPM is unique in the way that it allows you to bid on impressions but at the same time optimize toward offsite conversions. It requires implementation of a Facebook conversion pixel in this case, and the objective is to show your ads to those most likely to convert. Optimized CPM essentially influences 'effective reach' with a direct response goal in mind. The audience (illustrated in red below) grows or shrinks based on how much you are willing to bid on the desired goal. However, in saying that, you can also use oCPM to optimize on reach or mobile app installs for brand or mobile app objectives.
Below is a table summarizing the common bid types available on Facebook as well as some basic guidelines.
So Which Bid Type Reigns Supreme?
As long as the bid types chosen are effectively tied to the customer's campaign goal, you should be set up for success. Adoption of oCPM is growing in popularity across the market since its launch. Many who have traditionally used CPC for direct response objectives, such as offsite conversions, have tested oCPM and seen a tremendous uplift in performance results.
An Adobe Media Optimizer customer in the Financial Services vertical tested CPC vs. oCPM using Facebook's hold out tool. The hold out test randomizes and splits the audience into two different groups and is delivered the same creative messaging-one group targeting an audience using CPC, and the other group targeting the same audience using oCPM. These two groups are mutually exclusive yet accurate in terms of the same audience profile. So you can be confident that any uplift is due to the bid strategy. Budget, objective, audience, and creative are constant. Below are the key insights for oCPM where key success metrics have been indexed against the CPC campaign.
oCPM clearly outperforms CPC for this customer where the goal was to drive mobile app installs. Conversion rate was over 700 percent higher than CPC, and as a result, helped scale the campaign significantly with over 200 percent higher app installs. To top it off, cost per install was more than 50 percent lower compared to CPC. So oCPM is clearly the winner here. We've seen success in oCPM in much of our customer base for this reason. This is a direct response example; however, some of our customers are also using oCPM effectively in optimizing brand metrics such as reach or video views.
oCPM Is Great! But How Can I Scale My Campaigns Even Further?
So you may have tested different bid strategies to determine which works best for your marketing objectives. Many of you would have tested oCPM and found great success there. And we can acknowledge that Facebook algorithms are powerful with their cross-device campaign optimization based on authenticated audience profiles. But what else can you do to optimize your Facebook campaigns? Well, that's where the role of ad technology comes into play.
Let's explore this common scenario. A customer has a multitude of campaigns running concurrently on Facebook. You might have five different campaigns with a common objective tied to return on ad spend (ROAS) and two campaigns tied to brand objectives like targeted reach.
If we focus on one objective example-say with the associated campaigns tied to maximizing ROAS-the challenge is that Facebook will optimize each individual campaign to that objective. However, some customers want to maximize ROAS across these campaigns too, meaning that budgets aren't fixed for each campaign, and they will manually adjust campaign budgets regularly to maximize the overall ROAS for their business on Facebook. This can prove a laborious task for most. And we know that social media is an agile environment where time is not on your side when it comes to campaign management and optimization.
Effective budget optimization using a Portfolio approach complements Facebook's bidding best. A Portfolio is a group of campaigns under one single budget optimized to the same objective. So in the example, you would have the flexibility to group these five campaigns into one portfolio with an overarching budget. For simplicity, the visual below shows the portfolio concept with two Facebook campaigns.
Many customers are finding varying degrees of success with portfolio optimization. Below are two examples: a large insurance company and a leading property-listing website.
Enabling portfolio optimization improved key performance metrics, including conversion rate, acquisition volumes-and most importantly-cost per acquisition (CPA). Due to positive performance, these customers were able to increase their overall budgets to further scale the campaigns. The only caveat here to ensure success with portfolio optimization across campaign budgets is to make certain there is sufficient daily conversion data for each campaign. At the end of the day, effective optimization relies on having enough robust data to make accurate decisions.
There is no 'one size fits all' bid type for advertisers. Experiment with them to ensure you adopt the right product and bid type for each marketing objective. As trends toward mobile grow and create increasing cross-device challenges, test oCPM if you haven't already. It has a higher probability of delivering powerful results, and adoption is growing. Once you've established success with your bidding strategy, find ways to squeeze more value out of your advertising budgets if you have the flexibility in your business to move budgets around-on the condition that those campaigns deliver on the same objectives. Finding an automated way to optimize budgets will be key for many busy marketers and as trends swing toward programmatic advertising in key channels like social.