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Facebook Changes the Way It Charges Small Business For Ads
Last month, Facebook announced some changes to how it charges advertisers - including small businesses - for ads. Specifically, it is changing how it measures cost per click (CPC). The update comes as part of Facebook's latest Ads API release.
Going forward, cost per click will only account for certain types of clicks on the ads. Specifically, it will account for what Facebook refers to as "link clicks". These are clicks related to specific ad objectives including the user visiting another site, the user installing an app, or the user viewing a video on another site.
These link clicks also include call-to-action clicks and clicks to Facebook Canvas apps. Canvas, in case you're not familiar with it, is a frame Facebook gives app and game developers to put their apps and games directly on Facebook.com on desktops and laptops.
CPC will no longer account for another type of click that it used to account for. These are called "engagement clicks" (which is what Facebook refers to them as), and include other engagement actions such as likes, shares, and comments.
According to the company, advertisers who care about link clicks will see better returns on their ad spend and more efficient spending of their budgets as a result of the change in CPC calculations.
Facebook made it a point to tell advertisers that some of their campaign reporting metrics related to clicks may look different as a result of the changes. By excluding likes, shares, and comments, CPC may increase, but will also become more valuable as it counts only the clicks the advertiser actually wants, the company said.
It also could look like your click-through rate (CTR) has dropped, but this is also because CTR will no longer factor in those additional clicks.
When an ad has a lot of likes and shares, Facebook still considers that to be a signal of high-quality content being delivered to the right people. It says this is a positive signal and that it helps ads perform better at auction. Advertisers can still bid for engagement clicks by choosing different optimization options. They just won't be tracked in the updated CPC definition.
As you might imagine, advertisers have had mixed reactions to Facebook's CPC news, but based on what I've seen, there is a generally positive feeling from them.
One marketer told me that he expects CPC bidding to become a lot more efficient, and that he doesn't expect CPCs to go down, but up rather. Overall click volume will go down, and clicks will be more expensive, he said, adding that they'll also be more efficient.
That marketer (and others) see this as a truer measure of conversion rate and expects conversion rates to go up as a result.
Businesses who buy Facebook ads through Ads Manager or Power Editor won't have to do anything extra for now. The company will tell businesses more later on if need be. Advertisers purchasing ads through a Facebook Marketing Partner are expected to talk to that partner about when they'll be implementing the latest version of the API, which takes into account the new definition of CPC.
If you're buying ads through the Ads API itself, you can use the updated version to utilize the new CPC definition right away. If you need to continue using the old definition, you can continue to do that until October, at which point Facebook will mandate the new way.