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Facebook Ads: Are CPC or CPM Ads More Budget-Friendly?

FacebookSometimes trying to place a social media ad can feel more like trying to rearrange the deck chairs on the Titanic. The ever-present question for Facebook ads is whether it’s better for your budget to buy an ad based on CPCs or to buy one based on CPMs. The answer: it’s A-OK to do either … depending on what your business is.

Both CPC (pay for clicks) and CPM (pay for impressions) ads can fit into a business’s budget, and which one is a smarter buy depends on the business’s circumstances; sometimes cheaper isn’t better. For example, a pay-per-click ad that has been served up hundreds of times but isn’t generating any leads will eventually be all but abandoned by Facebook, since it’s not making any money on the ad, even though the advertiser is getting lots of exposure.

Here’s a look at the monetary advantages and disadvantages to CPC and CPM ads to help you to make your decision.

CPC Ads: Advantages

The most obvious advantage to using a pay-per-click method is, duh, you only get charged when someone clicks on your ad. That means you don’t have to pay for the people who see the ad but don’t do anything to act on it, and it can help keep the cost of a campaign down when budget is a concern.

Here are a few other advantages to using this method:

    – The need to figure out how to optimize an ad is decreased. In this case, you only want to pay for who clicks on it.
    – It can cost a very small amount of money. CPC ads have been known to run just a few cents for a campaign, even when you get actionable returns.
    – Using CPC helps ease you into Facebook ads and to get comfortable, an advantage for newbies.

CPC Ads: Disadvantages

Of course, there are downsides to CPC ads, including the fact Facebook can become suspicious of them. If your clicks are very low, but you’re getting a lot of impressions, Facebook may investigate to see if you are scamming the system.

Here are a few other disadvantages to using this method:

    – You will always pay at least your bid rate.
    – High-performance ads can make your budget shoot up suddenly.
    – There are fewer variables than when you use CPMs.

CPC Best Budget Bet

Say you have a professional service business (like this one, for example) and you’re hoping to reach local people. The best strategy would be to use PPC. That way you’re not paying for any extra traffic irrelevant to your business, and clicks would be real leads–as opposed to paying for impressions that may not lead anywhere.

CPM Ads: Advantages

The biggest advantage to using a CPM ad is that you can get a variable price for your ad. While with CPC you’re stuck with the same price no matter what, CPMs are dependent on how many people see what you’re serving up, regardless of how many act on it. So if 500 people click on your CPM ad, you may pay less than you would have if 500 people had clicked on your CPC ad.

Here are a few other advantages to using this method:

    – The rate is not correlated to performance–an advantage when an ad generates high click-throughs.
    – You can earn the lowest possible bid.
    – These ads are easier to optimize.

CPM Ads: Disadvantages

There are disadvantages to using CPM campaigns, however, and one is if you want to test out a new ad, the CPM method is a poor choice when compared to the CPC method. You could end up spending way too much money on an ad that generates just a handful of clicks, rather than paying for only the clicks with the CPC method.

Here are a few other disadvantages to using this method:

    – You pay for ads with low click-through rates.
    – Your ad won’t be positioned as optimally as a CPC ad, since Facebook has a vested interest in those click-throughs.
    – The performance of ads tends to wane with time.

CPM Best Budget Bet

For companies with bigger budgets — say a national dental insurance company rather than a local dentist’s office — CPM-based ads are the better bet. You can reach a mass of people at a lower cost, and that’s one of the great advantages of Facebook advertising.

As with many forms of advertising, the final decision about how to get the most bang for your buck comes down to the kind of products or services you’re advertising, who your target audience is and how much of a budget you have to work with. Knowing the advantages and disadvantages of CPC and CPM ads will help you make the final call.

Author

Kayla Matthews PhotoKayla Matthews is a business solutions blogger with a passion for productivity boosting and time-management. To learn more about her, follow her on Google+ and Twitter or check out her personal productivity blog!