Quality/CTR Difference between CPC/CPM Facebook Bidding Case Study

Whats this case study about?

A while ago Facebook went on a little slapping rampage and banned quite a few accounts. Affiliates got their accounts banned and daily spend limits lowered. Very soon after they sent out a notification saying they’re changing their system and CPC advertisers are going to get priority over CPM advertisers. They said CPC advertisers will receive more clicks than CPM advertisers.

What does this mean?

It means Facebook was going to use some sort of system to give CPC advertisers a way of getting more clicks than CPM advertisers. This led to a bunch of questions; are CPM advertisers going to get worse quality traffic? Where’s the ‘less clicky’ traffic coming from etc.

Mythbusting the Facebook CPC vs CPM CTR & Quality Questions

This case study is a test comparing identical ads with both CPC and CPM bidding on Facebook. With real mythbusters fashion we will debunk whether or not CPC and CPM bidding on Facebook affects the ads CTR and conversion rates.

Offer: Shokz Starcraft 2 Guide
Total Impressions: 320,813
Total Clicks: 173
Total Cost: $60.99

Ad:

Targeting:

Screenshot of the Campaign:

As you can see the CPC ads are highlighted in Blue, and CPM ads are in orange. The CPC ads dominated when it came to CTR (but don’t jump to conclusions just yet), let me show you the ads side by side.

Overall comparison of the top 6 identical CPC & CPM ads

Ad1

Ad2

Ad3

Ad4

The other 2 ads in my campaign followed the same pattern.

Ad5
CPC Ad (CTR) = 0.054%
CPM Ad (CTR) = 0.019%

Ad6
CPC Ad (CTR) = 0.052%
CPM Ad (CTR) = 0.015%

As you can see this is a solid proof case study. The common factor of CTR being much much higher in all the CPC ads is no fluke. Still, don’t go changing all your campaigns to CPC bidding model just yet. As you probably noticed, the cost per click for 3/4 CPM ads was cheaper (much cheaper in some cases) even though the CTR was significantly lower. So now we have to ask ourselves whats better, the higher CTR or the cheaper cost per click? You usually achieve high CTR so you can obtain a cheap CPC. This is what we’ll talk about next.

How much would 1000 clicks cost on our highest CTR Ad vs it’s rival?

The highest CTR ad was CPC Ad1 with 0.177% CTR and $0.32 CPC. It’s CPM rival ad had 0.056% CTR and $0.21 CPC.

Price of 1000 clicks on CPC Ad1:

  • 1000/27 (clicks) x $8.67 (amount spent)
  • 1000 clicks = $321.10

Price of 1000 clicks on CPM Ad1:

  • 1000/23 (clicks) x $4.89 (amount spent)
  • 1000 clicks = $212.60

OK, It’s more cost efficient to go with the CPM bidding model even though the CPC bidding model yields a higher CTR! We still don’t know if this is the right choice though. This is for 2 reasons.

  1. I didn’t lower my bids as low as possible
  2. We don’t know if the CPC or CPM bidding model yield better conversion rates

Some Thoughts

  • CPM ads are getting more impressions, even though CPC ads have higher CTR.
  • Maybe CPM ads are shown closer to the bottom/ below the fold on some browsers?
  • Maybe CPM ads are shown within Facebook Apps (we all know that’s terrible traffic), and CPC ads aren’t?

Final Observations:

  • CPC ads have higher CTR forsure!
  • CPM ads are still cheaper per click

But we still don’t know which bidding model to choose to make the most money!

Whats next?

The next part of this is key, because it will put this whole case study in perspective. Theres 2 things that need to be done.

  1. I’m going to take my top 2 performing ads (Which is Ad1 & Ad2) I’m going to make a campaign with these 4 ads and lower the bids as much as possible while still maintaining traffic. This will allow me to determine if CPC or CPM bidding model is cheaper for identical ads.
  2. I’ll be testing conversion rates for all 4 ads, to determine if CPC or CPM convert better. Which will be the ultimate deciding factor whether to use CPC or CPM bidding to acheive the best ROI on Facebook.

Part2 coming soon.

Hey this is Jordan from StackThatMoney.com. A blog solely based around making BIG money online, and more specifically affiliate marketing. Hope you enjoy my in-depth case study.


45 thoughts on “Quality/CTR Difference between CPC/CPM Facebook Bidding Case Study”

  1. Well its sad to see people pay for traffic when this stuff is free online, I just think people should keep their money and focus on Seo if they can.

    “TrafficColeman “Signing Off”

    1. d3so says:

      You get what you pay for and what you’re paying for is quality traffic.

      1. This one is really in depth information about facebook with cpc/cpm and others

    2. You are an idiot and will never make money online.

      1. There is a place for SEO and for paid traffic. This post is a nice case study that gives an insight into facebook advertising.

        It’s not sad that people pay for targeted traffic. It’s great that they can do so and make money with it.

    3. Abhik says:

      PPC campaigns always send highly targeted traffic and they tends to convert pretty well.

      SEO, in other hand is general traffic.

      1. SEO is also targetted traffic … but however you should not compare both as first one is paid and second one is some kind of free …

    4. Dan says:

      Do you not know what facebook ads are?
      Its CPC.

  2. Can you share which ad(s) were the most profitable? I’ve had campaigns where, unfortunately, the most costly ads provide the conversions.

    Wondering if this is the case here!

    Nice study btw 🙂

    1. PPC Ian says:

      Nice study, indeed! Reminds me of a Profit Addiction case study!

    2. I know what you mean, i’ve had the same thing in the past.

      The ebook i was promoting didn’t convert well at all, even though my traffic was very targeted. For part2 i’ll be promoting something that will get a lot more conversions. This way i’ll really be able to differentiate whether CPM or CPC bidding model converts better.

  3. Exoclyps says:

    Now this was indeed very interesting article. Well written too. I’m looking forward to the follow up.

    1. Thanks, part2 will really solidify everything, so it can all come together to make sense.

      1. I’m looking forward to the second part which should give more answers.

        The first part is excellent.

        1. d3so says:

          Hopefully we can see profits in the next part. I can’t wait.

          1. When the second part is going to publish here

  4. fas says:

    Facebook advertising is quite complicated, u really dont make much if u dont hit the sweet spot.

    1. Its all about experience my friend.

      Just devote some time and brain and you will know it.

  5. Harshad says:

    Nothing is generic when it comes to PPC or CPM ads. The key is testing. Things depend a lot on demographics, AD Copy, the actual offer etc. Every ad/offer/LP will give you different results. Always start with CPC model and when your CTR is high and the avg CPC in CPM model is lower, it’s time to switch to CPM.

  6. Ivan says:

    Hi Jordan,

    Shoemoney did some Facebook experiments a while back and one of the key findings was the ads with pretty girls scored the highest. The text was almost never (ie rarely) read, which is interesting for two reasons:

    Google Adwords is text/keyword based while
    Facebook ads may perform better with images

    Which may account for your top performing ads.

    More split testing I guess.

    1. Exoclyps says:

      Now that makes sense. I just took a second look at his ads. And the least attractive picture was the one who brought the least clicks on the CTM advertisement.

      But the girl on the other hand didn’t bring the most, but rather 2nd most. Although the guy was pretty cool, so I suppose that’s what did it.

      Either way, paying attention to that part really pays out. Having a attractive picture that relates to the subject gives the best conversion rate.

  7. dotCOMreport says:

    Thanks for this. Can’t wait to read what you come up with John…I have been wondering about whether to change my CPC ads to CPM. I think I’ll wait a bit till you are done with your research.

    1. Hey dot com report …

      My friend this is guest posting.

  8. Abhik says:

    Hello Jordan,
    Thanks for the case study. Just read another FB Ads case study on Daniel Lew’s blog.

    I really liked it as I am going to start Facebook marketing soon.

    1. Would love to know your experience Abhik.

  9. Hey this is Jordan from StackThatMoney. If anyone needs me to clarify anything about this case study ask it here and i’ll help!

    1. Abhik says:

      Can you tell us more about conversion rates for each type of ad?

      1. Have to wait until part2, sorry

  10. John says:

    I really haven’t tried to use facebook in my make money online quest. Just reading through your case study tells me that there’s still so much that I need to learn in terms of advertising.

    How do you become an affiliate in facebook?

    1. Exoclyps says:

      It’s pretty simple really. And you can start out for free if you’re a bit creative about it.

      Here is a blog post about a $50 dollar free ads coupon that I found. Not 100% sure it still works, but looking at the comments it does.

      http://reface.me/deals/facebook-ad-coupon/

      When I tried it out myself I ended up using a $25 coupon code back then.

      You need to be a first time user of their ad system for it to work btw.

  11. this is so new to me and i found it very interesting , knowing it is great and helpful , thank you for teh post 🙂

    1. This is specially for those people who are into affiliate marketing.

      So if you are and if you are planning than you can enjoy this service and post.

  12. I haven’t tried out the Facebook advertising yet but I guess they will start slapping marketers just like Google does with Adwords.

    As soon as they get big they tend to get ruthless 🙁

    1. d3so says:

      lol, that’s true. Big companies tend to do what they want and they aren’t too friendly with affiliate marketers.

      1. You know many affiliates still make a killing with google adwords so does facebook. Just do it.

        1. So according to you which one is the best method ?

    2. Harshad says:

      On the other hand there are many who are still making tons of cash with Facebook and AdWords. Nothing should hold you back, just go there and try things out.

      1. I agree that you should try things and stop worrying about what the big companies will do.

    3. Abhik says:

      So true..
      But it all depends on competition. Your ROI depends on the niche and optimization of the ads.

      1. If competition is high than I am sure money is also good.

  13. Nick says:

    I don’t understand your numbers.

    Firstly when you showed the table with your bids on the CPC ads it shows at $0.30, so how are you paying $0.30-$0.40? When you bid $0.30 max bid they cannot charge you more than that.

    Secondly you are showing your CPM bid at $0.24, so if for example on lowest paying CPC ($0.19) you are showing a CTR of 0.062% that works out at a CPC rate of almost $0.35 when bid at $0.24, not $0.19

    Am I reading it wrong?

    Sorry but don’t get your numbers??

    1. Your wrong.

      1. I change the bids multiple times through the campaign. CPC started off at 60 cents, and CPM started off at 35 cents.

      I don’t understand your second part.

      1. Nick says:

        You don’t mention that you change the bids at all. You imply with the table you are showing that the bids stay the same.

        The second part also assumes that you have not lowered your bids from the $0.24 as shown in the table.

        You state at the end of the article that you are going to start lowering the bids and the results will be shown on the next article, so how low have you already lowered the CPM bids? Because at $0.24 CPM and a CTR of 0.062% this does not equate to a $0.19 CPC!

  14. Kavita says:

    This is new to me. I have not yet gone for facebook advertising. I am grateful to know something new. Thankyou Jordan

  15. Facebook advertising is still in dark for the many of general and regular advertiser and these type of reviews will really going to work for them including me.

Comments are closed.