Facebook Introduces CPA Bidding
Facebook caused excitement in the Advertising Industry yesterday by announcing a new way to bid for ads on the social network, on a Cost-Per-Action (CPA) basis. Now advertisers can use this pricing model to define the action that is most important to them and set a max price they are willing to spend for each of those actions. For example, now a company could say it just wants to pay for page Likes and other clicks won’t affect their budgets. Although the new option is only available for selected ad categories at the moment, it is expected that CPA will become available on the full range of Facebook ad types.
With the new pricing model in place, advertisers can have more control on their budget. They no longer have to run ads on a cost-per-click (CPC) or cost-per-impression (CPM) basis and constantly monitor their ads to understand where the money is being spent. This recent announcement proves that Facebook is hard at work to deliver and to give advertisers more value for their buck. According to marketingland.com, CPA bidding is now available globally through its ads API. CPA will make its way to the Power Editor and Ads Manager in the near future. For the time being, advertisers can apply CPA bidding on three types of ads or actions, Page Likes, Offer Claims and Link Clicks. Although CPC pricing will still be available and is not being replaced by CPA, all marketers will be included in the same auction.
According to marketingland.com, a Facebook spokesperson reportedly said that in many cases CPA ads will deliver better value than CPC. The company believes this is largely due to its predictive modeling algorithm that it uses to show CPA ads to the right audiences and therefore maximizing the chances of success. As reported on imgrind.com, CPA delivers more predictability of ad spend by setting a price cap for certain types of desirable actions. Facebook will then optimize ad placements to deliver ads to those it believes are likely to convert on those actions.
While it’s still in its early stages, CPA ads on Facebook will surely ad value for many advertisers. In a previous article that I wrote, Facebook Moves Ahead with Mobile Advertising Platform, I highlighted the company’s enthusiasm towards advertising. This again is another example of Facebook’s focus on advertising. Whether advertisers will shift all their Facebook advertising to CPA bidding will probably soon be seen. What are your thoughts on this?
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