CPM vs CPC: What Facebook Bidding Strategy Works Best?

One aspect of Facebook ads that can be especially confusing—especially for beginners—is the concept of bidding strategies. It can be difficult to grasp exactly what you’re paying for, and how much you’re paying for it, leading to advertisers quickly skyrocketing past their budgets without even reaching their advertising goals.

When choosing your bidding strategies (your choice being CPC, CPM, and Optimized CPM), you are choosing how you want to spend your money on Facebook. You are choosing what you want kind of results you want to prioritize as well.

For a video overview, you can watch the video below.

How do Facebook’s Bidding Strategies Work?

The concept of a bidding strategy can be confusing. When I first started learning about Facebook advertising, I know I was confused by it. So before we dive into each individual bidding strategy and how they each work, it’s important to understand the foundation of Facebook’s bidding strategies.

There is a reason it’s called a “bidding strategy” and not a “choose your price plan.” You are essentially taking place in a virtual advertising auction where you are competing with other advertisers to get your ads in front of those you want to see them. If there’s not a high demand for your target audience, you won’t pay as much, but if there is, you’ll see that demand reflect in what you pay.

This means that how you bid—and how much you bid—is important to success.

cpm vs cpc

If you choose the wrong bidding strategy, it is way too easy to go over budget or not get the results that you want despite paying for them.

If you bid too little, you won’t reach your audience; if you bid too high, you’ll spend too much with not enough results.

To find Facebook’s bidding strategies, you can either click the “advanced options” button in Facebook’s create-an-ad tool, or you can find them in the pricing section of Power Editor.

CPC

CPC stands for Cost Per Click. The concept is self-explanatory. When someone clicks on your ad, you pay.

cpc bidding strategy

When you’re using CPC, Facebook automatically tries to optimize its delivery, giving you clicks at the lowest price possible within your established bidding range. The price you select as your bid is the maximum.

CPC tends to work best when conversions are in mind, particularly conversions of clicks to a website that isn’t Facebook, or any other kind of conversion that can be tracked with Facebook’s tracking pixel.

Keep in mind, though, that while someone clicking on your ad doesn’t mean they’ll definitely convert, you’re still paying for it.

If you’re running a CPC campaign that’s getting a lot of clicks but few sales or conversions, it may be time to restructure your ad or choose a different bidding strategy. Because of this, CPC isn’t the most popular bidding strategy, and it can become too expensive with underwhelming results.

CPM

CPM stands for Cost Per Mille.

When you’re bidding using CPM, your fixed budget reflects the maximum amount of money you want to spend for 1,000 impressions.

To break it down and contrast with CPC: with CPM you’re paying for the most amount of people possible to see your ad, with CPC you’re paying only for people who click on your ad.

CPM is fantastic when creating brand awareness and for large companies. It’s about showing your ad and your name to as many people as possible. When choosing CPM, you’re playing reach over actions.

Optimized CPM (or oCPM)

We most frequently get asked which bidding strategy is better, CPC or CPM. We don’t get asked about Optimized CPM nearly as much, which surprises me because it is, indeed, another option for those creating Facebook ads.

It does make sense, because CPC and CPM are slightly more different than CPM and oCPM, but for the sake of being thorough in our analysis, we’re going to take a look at oCPM today too, especially since it’s a popular choice in today’s bidding strategies.

oCPM is an option with customization available through Power Editor. As you can probably guess, it stands for Optimized Cost Per Mille.

It often costs more per bid than CPM, but it boasts “optimized” results. It’s “optimized” because it shows your ads not only to 1,000 people, but 1,000 people who have past history of responding well to ads similar to your own.

This means more actions are likely to be taken within those 1,000 impressions.

Within oCPM—in Power Editor— you have two choices (as if choosing just the basic bidding strategy wasn’t hard enough). You can choose to utilize the default bids—the ones Facebook sets up for you—or you can actually break down the bids based on what you want to prioritize, giving specific price values to clicks, social impressions, and actions.

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If you know exactly what you want to prioritize, you can manually adjust your bids. If you don’t, or if you’re just looking to increase engagement on Facebook, it’s normally best to leave the bids at their default suggestions.Screen Shot 2014-09-19 at 2.19.36 PM

So which is better, oCPM or CPM?

Optimized CPM can cost more, but it is optimized in a way designed to get you the kind of results that you want. You’ll see more converions with oCPM, getting more bang for your buck (even if the “buck” amount was larger). To see an Jon Loomer’s tests on oCPM vs CPM, click here.

Conclusion

So which bidding strategy works best?

It depends on you, your company, and your goals. There is not necessarily a right answer for everyone.

A lot of advertisers tend to prefer CPM—even if they aren’t getting the clicks, their ads are being shown more and increasing their brand awareness.

More and more advertisers are using oCPM.

Yes, it does cost more than regular CPM (sometimes significantly so), but it’s often seen higher yields in results. Facebook knows its users—and their receptivity to certain types of ads—better than anyone, and paying a little bit extra for that inside knowledge can boost your campaigns to new levels of success.

Paying more can be ok when it means you’re more likely to get better results out of it (instead of still paying, just not quite as much, and not quite getting the results you wanted).

What Facebook bidding strategy do you prefer? Leave us a comment and let us know what’s worked for you.