Why Facebook's New Pricing Could Boost Ad Spending and Creativity

Facebook revealed Wednesday that it cleaned up its cost-per-click pricing model, much to the delight of marketers who were tired of paying for ads after viewers merely tapped the "like" or "share" buttons. Indeed, advertisers, if they choose, can now select buying options so they will only be charged for promos when clicks include website visits, the "Shop Now" button, mobile app installs and video views. Keywee CEO Yaniv Makover and other industry players believe the move will be a boon to Facebook's ad sales as well as the attention paid to creative for the site's promos, particularly when it comes to branding-minded marketers. Makover predicted the spending increases "will be significant" among packaged-goods companies and automotive brands. If he and his peers are proven correct, the social media giant's investors will be thrilled since its ad sales growth rate was starting to slow during the first quarter. "Now that Facebook CPC actually refers to cost per website click, brands will feel like they are comparing apples to apples [with other platforms like Google]," Makover said. "They are going to be spending more money on Facebook." He also noted that "the new CPC rates are going to be a lot higher compared to the old CPC. So if you were paying 5 cents for a click, now you will be paying around 16 cents." Indeed, these kinds of paid social promos don't appear to be getting any cheaper. Though David Deal, a Chicago-based digital marketing consultant, said we'll see an increase in brand spending on Facebook ads—on one condition. "Focusing on click-throughs will make Facebook more valuable so long as Facebook can deliver targeted audiences to brands," he said. "It's not enough for Facebook to drive more traffic to a website. Facebook needs to consistently deliver well-defined and desirable audiences." He then added, "The change in Facebook's pricing configuration is further evidence that social media is morphing into a direct-response play for brands. We've already seen Facebook, Instagram, and Pinterest introduce buy buttons recently. Likes and shares are less important than commerce." Omer Shai, chief marketing officer at Wix.com, largely concurred. "This change will help draw even more direct-response marketers to Facebook since it purifies the traffic-acquisition process and guarantees that every dollar spent on [the platform] will now lead the user to the funnel marketers are promoting," he said. It's hard to argue against platforms like Facebook giving advertisers better tools to meet their goals. Twitter underwent a similar development last year, letting brands pay only for consumer interactions that align with their actual marketing aims. And Google's display advertising system is set up similarly. Interestingly, Shai and others suggested that the new CPC model will also improve Facebook ad creativity. "Think about it, if you're trying to lead users into the funnel and avoid paying for social actions, you'll probably use very clear-cut creative now with this change," he said. "I'm sure we'll start seeing ads that are really pushing the boundaries." And Deal, the consultant, remarked: "The focus on click-throughs will pressure brands to make more effective creative ads on Facebook. Compelling people to visit you or buy from you is more challenging than convincing someone to simply like your ad. Brands will need to work harder to benefit from direct-response ads."

Performance Marketing

Why Facebook's New Pricing Could Boost Ad Spending and Creativity

Marketers expect big ramifications

Christopher Heine

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Christopher Heine