Facebook’s new CPA bidding technique: there’s a big catch

Rubic's

Facebook continues to go through major changes in the way advertisers can bid on traffic. The introduction of CPA-based bidding marks a true alignment between Facebook and advertising, because at the end of the day, most advertisers don’t want to absorb the risk of CPC or oCPM bidding.

The reason CPC and oCPM bidding methods are risky is that the conversion rate can fluctuate, and when the conversion rate is low one day, the cost per action will be above your targeted range.

Facebook reduced this risk by introducing the CPA bidding method, which lets an advertiser select a CPA that meets its business objectives.

optimization & pricing

Although this seems all nice and rosy, we’ve found that the competition for CPA-based traffic is higher than the competition for CPC-based traffic, and therefore the CPAs you need to bid to get traffic are actually well above those you would receive if you were just carefully managing CPC bids yourself.

CPA-bidding Case Study

We sometimes use CPA bidding for apps that can support higher CPAs. However, many apps target lower CPAs and therefore can’t afford to pay the relatively high minimum CPA bids Facebook seems to be requiring.

For example, we had a client running day-to-day at around a $2.00 CPI when running on CPC, and when we moved to CPA the minimum bid jumped to over $6.00 after a day. We kept the bid at $2.00 and traffic dropped to almost nothing. We tried bidding at the $6.00 mark and found that we could get traffic at that bid, but that CPI we ended up paying was pretty close to $6.00. We were forced to move back to CPC bidding to get any traffic. Traffic picked back up after we moved to CPC bidding.

The moral of the story here is that every new technique always has its pros and cons. For some of our clients, this new technique is working very well. For others, it isn’t. My best advice would be to test out this new technique and see if it works for you.

Ryan Pitylak

About Ryan Pitylak

Ryan Pitylak has spent the past 15 years creating innovative methods to drive superior results from digital advertising. As the CEO of Unique Influence, a leading digital marketing consultancy, he leads his team to excellence by merging creative advertising techniques with a data-driven and iterative approach. By constantly working to surpass established advertising methods and creative best practices, Ryan delivers ROI-focused results for high-velocity companies.
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2 Responses to Facebook’s new CPA bidding technique: there’s a big catch

  1. Terry Whalen says:

    Ryan, great post. It is cool that Facebook has introduced CPA bidding as an option, but I suspect that for direct marketing campaigns (not fan acquisition) this won’t be a good option for most advertisers most of the time. When the risk is shifted to Facebook, and when there are plenty of alternative options for FB to monetize ad inventory to get the highest eCPM, FB algos will act conservatively on CPA campaigns.

    IMO it’ll usually probably make more sense to keep the risk in the middle – the advertiser takes some risk, and FB takes some risk – and go with CPC bidding.

  2. Hi Ryan,

    Interesting post with some valid points – are you able to provide some more working examples?

    We’ve found that in retail CPA works really well and have blogged about it here https://stitcherads.com/improve-your-facebook-cost-per-acquisition/ and would love to hear your thoughts.

    Verity
    StitcherAds

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