Facebook is today launching cost-per-action ads for certain actions through the Ads API, a company spokesperson tells us.
This pricing model lets advertisers define the action that is most important to them and set a maximum price they’re willing to spend for each action of that type. For example, instead of paying for every click — whether it came from a user who simply viewed a photo larger, left a comment or visited the advertiser’s fan page instead of actually Liking the page — a company could now say it only wants to pay for page Likes. Any other clicks or engagement won’t take away from the advertisers’s budget.
This option gives advertisers more control over their spends. Previously, a company would have to run ads on a cost-per-click or optimized cost-per-impression basis, and then constantly monitor their ads to understand the actual amount they were spending per action. Because Facebook ads include so many potential actions for users to take — photo views, Timeline visits, page Likes, post Likes, comments, shares, link clicks, etc. — it can be frustrating for advertisers to be paying for clicks that don’t accomplish their primary marketing objective. This is why cost-per-action ads are something many advertisers have asked for from Facebook, and many third-party providers were selling ads this way, even if Facebook’s API didn’t officially support it.
Now CPA bidding is in the Ads API, though it’s not part of the Power Editor or main self-serve ad tool. For now page Likes, link clicks and offer claims are the only actions for which CPA bidding is available, but we imagine the company will roll this out to app installs, view videos, photo shares, Open Graph actions and others eventually.
Facebook’s oCPM ads introduced in late 2011 were a move in the right direction, since it allows advertisers to define their objectives up front and have Facebook automatically serve the ads to people who are most likely to take those actions. Many advertisers have started to find this more valuable after some initial confusion and skepticism. Now with conversion measurement in place, oCPM has helped companies like Fab reduce their costs per customer acquisition and conversion. CPA ads could improve this even further, especially if Facebook makes it possible for advertisers to define off-Facebook conversions as actions they want to bid for. And since CPA ads set a maximum bid, they don’t necessarily need the same monitoring and optimization on the advertiser’s end, which oCPM can require to be successful.