Bid info: CPC, CPM, oCPM, CPA, and CTR

Where do I find Bid Info?

In the audiences step of the campaign wizard, it's possible to manually set the bid info options for your ad sets. To do so, click on the gear icon in the top right of the audience and go to the tab Bid info. In the following menu, it's possible to input the bid info. By selecting Set Manually you can fill in which bid type you want to use: CPC, CPM or Absolute OCPM. 

Which are the different Bid Types?

CPC: As an advertiser in Facebook, you use business goals like website clicks, and need to know how effective your ad is at driving the stated goal.

Currently, Cost Per Click (CPC) on Facebook is measured by any click taken within an ad unit: a Like, Comment or Share and also clicks to a website, etc.

Because this is a very generic statistic, Facebook also added a Cost Per Click metric that only includes clicks to websites and apps, and not likes, shares and comments. This updated measuring of CPC we call the link clicks, the clicks related to certain ad objectives:

  • Clicks to visit another website
  • Call-to-action clicks that go to another website (e.g. Shop Now)
  • Clicks to install an app
  • Clicks to Facebook canvas apps
  • Clicks to view a video on another website.

When optimising on CPC in the Hyper Optimisation or paying for link clicks in the bid info, the price you see and/or fill in, is the price per link click; you're not paying for all general clicks.

CPM: CPM stands for Cost Per Mille. This is the amount of money needed to generate 1000 views.

When optimising on CPM in the Hyper Optimisation or paying for impressions in the bid info, the price you see and/or fill in is the price per 1000 impressions. Not the price per individual impression.

OCPM: Absolute OCPM (Optimised Cost Per Mille) will automatically bid to achieve best reach results. 

CPA: CPA stands for Cost Per Action or Cost Per Acquisition; the amount of money it costs to get one click, like or share. This of course depends on your campaign target.

CTR: CTR stands for Click Through Rate, which is the amount of clicks on a link as a part of the total amount of views. For instance, if your ad has a total view count of 5.000 and 500 clicks, the CTR will be 10.

If you want to read more about these bid types, read this article.

How do I choose which one to use?

We've been getting loads of questions about the best way to setup a bidding strategy for Facebook campaigns. By default, ad campaigns on Facebook run using oCPM. But this is not always the best option to go with. That's why we've created this 3-step guide to help you choose the best bidding strategy on Facebook and get the most out of your campaign budget.

1. Define your business goal

  • Brand Awareness
  • Conversions

We'll call these your business goals. It's absolutely crucial to choose one of them and not both. However it's a bonus if you're running a conversion campaign and see an increase in brand awareness. Or the other way around. But don't make the mistake to promise your manager or client you can do both.

2. Choose your bidding strategy

Now your business goal is set you can pick your bidding strategy quite easily.

Building a Facebook ad campaign you can set Facebook to optimise for different 'bid types.'

  • Impressions (CPM): Cost Per Mille, or cost per 1000 impressions
  • Clicks (CPC): Cost Per Click: the price you pay for every click
  • Conversions (oCPM)
  • Actions (CPA)

It's good to know that Facebook uses a Vickrey auction model. This means that the highest bidder wins but the price paid is the second highest bid. The goal of this auction is to give you an incentive to bid your true value. So whatever you set for your CPM, CPC, oCPM or CPA, set it to a value which is worth it. For example, If I want people to click to my website and I am willing to pay $1 per click, I'll set my CPC to 1. Or if I want new users to download my app, but I only want to pay $2 per install, I'll set my CPA to 2.

Brand Awareness:

If your main business goal is Brand Awareness, the best way to go is CPM as impressions are the best way to reach as many people as possible for a fixed price. Sometimes we also get questions if page post engagement is part of Brand Awareness as well. However, in this case you want as many people engaging with your content as possible. So instead of just looking at your ad you want people to do something. And asking people to do something isn't part of your brand awareness business goal.

As a small side note, CPM is not exclusively tied to brand awareness campaigns. We've written an advanced article on how CPM bidding can also help you with your conversion campaigns as well. 

Conversions:

The business goal conversions is a little bit more extensive since it can cover more situations. A conversion is anything you want a user to do from signing up for your newsletter to buying something in your web store. This is also the most challenging goal you can have in terms of advertising. Not only is it a matter of bidding, but also setting up the right ad creatives and building a tailored audience to get the most out of your campaign. But for now we’ll just focus on the bidding strategy.

So with conversions in mind you'll need to ask yourself what you want your target audience to do. Based on the answer you can easily pick your matching bid type.

  • Do you want your users to download your mobile app? If so, then you want Facebook to bid for actions, so CPA.
  • Do you want your users to click on your ad? If so, then you want Facebook to bid for clicks, so CPC.
  • Do you want Facebook to automatically optimise for your Facebook campaign goal (website conversions, post engagement, offer claims etc) then your best bet is oCPM.

Default Facebook will choose oCPM for all your campaigns. oCPM is a bid type which helps you automatically optimise for your goal. You could see it as an auto pilot combination of CPC and CPM with Facebook trying to find the people most likely to show the desired behaviour.

There are also some disadvantages to oCPM. One major drawback is that it is built for large audiences of >1 million. If you have a small niche you want to target, chances are that it will not be able to find the right optimisation given the limited audience size. Another one is that you are completely relying on Facebook to optimise your campaign. And that does not necessarily work out well all the time.

3. Evaluate your strategy

Measuring your campaign is key in reaching your optimal outcome. Now that you've chosen your business goal and your bidding strategy, it's time to evaluate how your campaign is performing from the bidding perspective. If your campaign is not performing well, there are a lot of things you can do. Do you have the right creatives? Is your targeting right? Did you think thoroughly about your audience funnel? Does your business goal translate back to all parts of your campaign? But often it's also a matter of evaluating your bidding strategy. I have seen campaigns performing poorly to becoming highly successful only after switching to another bidding strategy.

The safe way is to start off with oCPM. Whatever your results are you can try to switch the exact same campaign to for example CPC later to see if you get better results. Remember to give each change some time to settle down to get a representative analysis. Also try not to make multiple changes at once. Making just one change at a time will help you pinpoint the exact balance your campaign needs to succeed.