Facebook’s new CPA bidding technique: there’s a big catch
Published: January 3, 2014
Author: Ryan Pitylak
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.
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.