An Experiment: CPM or oCPM When Targeting Facebook Fans With Ads?

Promoting Posts to Fans oCPM vs. CPM

A phrase I repeat regularly when it comes to succeeding with Facebook ads is “Never assume anything.” If you assume you know, you don’t. As a result, you may either waste money unknowingly or miss an opportunity.

This is why I recommend starting most campaigns broadly in terms of targeting and placement. If you assume mobile is going to be most cost effective and sidebar won’t work, for example, you may be surprised by the actual results.

Since I’m always second guessing, experimenting and trying new things, I recently decided to test a long-held advertising habit when targeting Fans only.

[Tweet “Should you use CPM or oCPM bidding when targeting Facebook Fans with promoted posts?”]

My Typical Bidding Behavior

First of all, a very quick overview of your bidding options when creating Facebook ads:

Cost Per Click (CPC): The maximum you’ll pay per click on your ad. Since distribution is based on an auction format, the amount you ultimately pay per click will depend upon the competition.

Cost Per 1,000 Impressions (CPM): The maximum you’ll pay per 1,000 impressions of your ad. Once again, the amount you pay will depend upon competition for the same audience and placement.

Optimized Cost Per 1,000 Impressions (oCPM): Facebook optimizes your ad by showing it to the people most likely to perform your desired action (within your target). Additionally, bidding is automated. Your bid will change dynamically based on competition, assuring that you’ll reach your desired audience.

Since oCPM is “optimized,” the final CPM price is typically much higher than CPC or regular CPM. But — also because it’s optimized — I’ve found it’s almost always most efficient.

While I used to split test CPM vs. oCPM in particular, I rarely do anymore. I’ve simply found repeatedly that oCPM gives me the best Cost Per Desired Action (Page Like, Link Click, Conversion, etc.).

This includes targeting Fans, whether it be promoting a post or selling a product.

Second Guessing My Advertising Habits

However, I started wondering recently if using oCPM made sense when targeting my Fans only. Why, for example, do I need Facebook to optimize my audience? By reaching my Fans, I’m already reaching a naturally optimized group of people.

And if CPM costs less than oCPM (typically significantly less), might I save money by going with it instead? Or is oCPM so effective that the higher price per impression doesn’t matter?

This is what I wanted to find out. So I ran a test…

CPM vs. oCPM for Fans Test: Link Clicks

I promoted four different posts last week. In each case, I targeted Fans and email subscribers (who aren’t current Fans) only in the News Feed (desktop and mobile). I optimized for Link Clicks for each one.

These are organic posts that I simply promoted to reach more of my relevant audience in an effort to increase website traffic. Here are the four posts:

Jon Loomer Digital Promoted Posts 12-9 to 12-12

I promoted each for a very short period of time because I prefer to only have posts promoted while I don’t have another new blog post shared in my Fans’ News Feeds. They all ran from late morning when the post was originally shared to 6:00am the following morning.

In each case, I created separate campaigns for CPM and oCPM, with two different ads in each (one targeted at Fans and one at newsletter subscribers who aren’t Fans). Each campaign had a lifetime budget of $5, and I set a maximum CPM bid of $2.50 (reminder: oCPM is set dynamically).

To summarize, here are the campaigns that were created:

  • Reach Rant – Fans and Subscribers – oCPM
  • Reach Rant – Fans and Subscribers – CPM
  • Increase Reach – Fans and Subscribers – oCPM
  • Increase Reach – Fans and Subscribers – CPM
  • News Feed Test – Fans and Subscribers – oCPM
  • News Feed Test – Fans and Subscribers – CPM
  • Facebook Offer ROI – Fans and Subscribers – oCPM
  • Facebook Offer ROI – Fans and Subscribers – CPM

Since the impact of the ads targeted at the newsletter subscribers was so minimal (it was a small group and Facebook preferred targeting Fans), I will lump that ad in from this point forward and focus only on the campaign results.

CPM vs. oCPM: The Results

Here’s a comparison of results on a campaign vs. campaign basis:

Campaign Spend Link Clicks Cost Per CPM
Reach Rant – oCPM $5.00 44 $0.11 $5.83
Reach Rant – CPM $1.67 10 $0.17 $1.38
News Feed Test – oCPM $5.00 59 $0.08 $4.35
News Feed Test – CPM $1.58 18 $0.09 $1.38
Increase Reach – oCPM $5.00 97 $0.05 $5.95
Increase Reach – CPM $1.64 32 $0.05 $1.40
Facebook Offer ROI – oCPM $5.00 27 $0.19 $5.17
Facebook Offer ROI – CPM $2.12 11 $0.19 $1.33

A couple of things should immediately jump out at you:

  1. The cost per 1,000 impressions is significantly higher (3-4X) when using oCPM
  2. The budget was never reached (not even close) when using CPM

Now let’s take a look at the overall results, lumping all similar campaigns together to compare CPM vs. oCPM:

Campaign Bidding Method Spend Link Clicks Cost Per CPM
oCPM $20.00 227 $0.09 $5.24
CPM $7.01 71 $0.10 $1.37

Okay, now let’s start breaking this down:

  • Cost Per 1,000 Impressions nearly 4X higher for oCPM
  • oCPM reached full budget, while CPM reached only 35% of it
  • Cost Per Link Click nearly the same
  • oCPM resulted in more than 3X the Link Clicks

Also, here’s another important stat that I haven’t covered yet: Total Impressions…

  • CPM: 5,124
  • oCPM: 3,817

Even though the ads are being shown to 74% of the audience, oCPM is resulting in three times the link clicks.

So what we find here is that while the Cost Per Link Click is nearly the same, oCPM brings more results. In order for this to happen, oCPM must actually be optimized — Facebook must be showing my ads to Fans most likely to click on a link in order to counter the significantly higher Cost Per 1,000 Impressions.

A Note on Bidding

Since I didn’t come close to reaching my budget using CPM, it’s important to note my maximum bid of $2.50. I could not bid higher than that due to my $5 daily budget.

The budget could have held the campaigns back some. However, keep in mind that the overall Cost Per 1,000 Impressions for my CPM campaigns was $1.37. Since I didn’t get particularly close to that $2.50 maximum, I question whether it would have made much of a difference.

That said, I have to recognize it as a potential limitation. I plan to try this again with a $10 budget and $5 maximum bid (if not $20 and $10).

In Conclusion

This study reaffirms my faith in oCPM. While using the CPM bidding method may seem like the most cost effective method on paper, oCPM is so well optimized that I still end up getting better results.

Now, keep in mind that these results are for my Page only. It’s a small sample size. While I trust the results for me, you should always test to see what works for you.

How about you? Do you tend to use CPM or oCPM when you target Fans only?

Let me know your approach in the comments below!