Facebook Ads Costs Explained: CPC vs. CPM

Facebook ads costs explained

Those who use Facebook Ads often debate the benefits of using CPC (Cost Per Click) or CPM (Cost per Mille). These two little acronyms cause advertisers a whole lot of grief.

How are we supposed to know which one to use on our Facebook Ads? Even worse is that you are almost certainly paying the price if you aren’t using the right one at the right time. But we’ll get to that…

Facebook Ads Cost: CPC vs. CPM Explained

If you hear the terms “CPC” or “CPM” and think, “What’s the difference?”, here is a quick “dictionary” definitely for you.

Facebook Ads CPC Definition

Facebook Ads CPM Definition

Notice that your bid price is noted as an approximation in the graphics above. You do not get to choose your exact bid price, but instead, when using Facebook Ads you get to place a bid that will then be used by Facebook to determine your actual costs.

For example, if Facebook suggests that I bid between $0.50 & $1.00, I might select to bid $0.75 for my advertisement. Then, Facebook will take that $0.75 and reference that bid against all other bids for advertisements to your market and determine what your actual costs will be based on the open market price.

So that $0.75 you bid might very well end up only costing you $0.60 or even less. By that same token, you could also end up paying exactly $0.75.

This is just an example, we have found ways to get bids for pennies on the dollar. And we can help you do the same. That’ll have to wait though, I’m getting distracted.

For now, I’ll just say that the power of Facebook Ads comes by bidding the optimum price at the right moment. But more on that later.

So “Cost Per Click” essentially means that you will pay the bid price that Facebook sets for you, as we explained above, each time someone clicks on one of your facebook ads. Simple as that.

What are “Impressions”?

Facebook Ads cost impressions

An “impression” is a display of your advertisement. So anytime your advertisement gets displayed to a user, your ad is getting an “impression”. Facebook has moved away from the term, “impression”, and instead now describes this figure as your advertisement’s “reach”. But for the purpose of explaining CPM ads costs with Facebook, we will stick with “impression” for now.

So just like we describe above, Facebook will take the bid you chose and determine your actual cost.

The big difference with CPM advertising is that you do not pay each time a user clicks on your advertisement. Instead, you get charged the market-determined ad cost each time your advertisement receives 1,000 impressions. So regardless of how many clicks you receive, you get charged each time your ad gets displayed an additional 1,000 times.

The name “Cost per Mille” (CPM) draws from the Latin language. Mille is the word the Ancient Romans would have used to mean one thousand. Which is exactly where we get the meaning of Cost per Mille, meaning a price for 1,000 views of your advertisement.

 Which one do I use?

People debate the use of CPC over CPM or vice versa to no end. Facebook Ads is pretty much a guessing game for so many marketers out there, while most people are just seeking the lowest costs possible.

Well after spending a small fortune on Facebook advertising, and testing the living daylights out of everything Facebook Ads has to offer, I can tell you that CPC is definitely right for our business.

But before you rush off and sink a big bag of money into CPC advertising, I can also tell you that CPM absolutely dominates for others. The subtle difference between these two cost structures can mean a world of difference.

The real power comes when you can match your business/service with an ideal suggested bid and leveraging the strengths of both CPC & CPM advertising. But we’ll have to visit that inside the Member’s Area sometime. Sounds like a good idea for a webinar.

 

That’s all for today guys, thanks for reading! If you are looking to get serious about your business through Facebook Ads, and want to take a look inside our advertising campaign to hear exactly how we make it all happen, check out Facebook Ads Secrets right here.

 

5 thoughts on “Facebook Ads Costs Explained: CPC vs. CPM

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  4. Hi Scott

    Thanks for your post.

    I think the first principle to remember is that Facebook will always try to generate as much revenue as possible from your ads.

    The way I view CPM vs CPC is as follows:

    CPM gets your ads in front of a pre-determined number people. This is great for brand-awareness. CPM can be more effective for this than CPC. Once you’ve spent your CPC budget for the day, the ads stop showing (simplistic I know but the principle is correct).

    CPC on the other hand works very well when you want people who see the ads to take action – a like or a click for example.

    If no-one clicks on a CPC ad, provided your ad is showing you are still creating brand awareness (if your brand is clear in the ad). If someone takes the action you want, and clicks on a CPC ad only then do you pay for it (compared to CPM where you are paying for impressions and you might end up paying a lot for nobody taking any action).

    All the best,

    Paul

    • That’s a great point Paul. Very true and many should employ that kind of strategy. If you are shooting for purely “brand awareness”, CPM can be a great tool. Having tried both ways plenty of time, I know that isn’t right for us. But definitely can be a solid strategy for select kinds of business. Thanks for sharing!

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