Facebook Tests New Ad Pricing To Help Optimize Campaigns

A Facebook advertising test currently being conducted for informational purposes could lead the way to something much, much bigger: Charging marketers per engagement, as opposed to per click.

A Facebook advertising test currently underway for informational purposes might lead the way to something much, much bigger: Charging marketers per action, adding likes and comments to the usual clickthrough-based pricing.

German Facebook tab developer 247Grad brought the test to our attention, discovering it when creating a campaign, and encountering the following text (see the screen shot below):

We will try to get as many people to like your page or install your app given your budget, by delivering the ad to those people most likely to take action. You will be charged each time your ad is viewed. Please choose this option only for ads for pages and apps on Facebook.

Facebook confirmed that it was running the test on its ad platform, but the social network said it was being conducted solely to allow marketers “to indicate that they’re interested in optimizing their campaigns for actions.”

A source with knowledge of the test confirmed that information, saying payment was still being collected on a per-impression basis, and not per action, and adding that the test will determine whether marketers are interested in paying for actions such as likes and installs (for applications).

However, should Facebook take this concept to the next level, it could shake up the online advertising sector.

If the social network went to a pay-per-engagement payment model instead of the standard pay-per-click system, marketers would likely pay a higher unit price, but receive a better return on their investments, since they would only be paying for users who actually engaged with their content.

The last sea change in the online advertising sector occurred around 2000, when pay-per-click emerged, eventually dominating over place of pay-per-impression, or view, which basically meant hit counts.

Again, this pay-per-action scheme is just a test, and Facebook has not stated any intentions to change its pricing models, but we think this new pricing model is cool and hope it sticks around.

Readers, what do think about ads sold on a pay-per-engagement basis?