Facebook Rolls Out Ads Conversion Measurement Tool With Optimized CPM

Amid the hype of its new search technology Graph Search, leading social network Facebook has rolled out a new system to measure and improve the conversion of advertisements, allowing small- and medium-sized businesses (SMBs) to assess the performance of their ads on the social media platform.

According to Facebook, the conversion measurement system allows advertisers to measure the return on investment (ROI) of their ads, taking into account relevant actions from users who came across the ads on the world’s largest social networking site.

First revealed in November, conversion measurement is now available worldwide and on all Facebook ads and sponsored stories, and in combination with other targeting services.

Direct marketers can use an optimized cost per mille (CPM, the advertising cost per thousand views) or cost per impression (CPI, the online advertising cost per view) to pitch ads to Internet users who are most likely to convert them on their sites.

Facebook business
Featured image by Sean MacEntee via Flickr (CC)

Conversion Measurement

Facebook wrote in a blog that conversion measurement used with Optimized CPM in its beta tests cut the cost per conversion by 40 percent compared to CPC ads on similar budgets.

Facebook ads and sponsored stories can help marketers push specific actions on their websites, but conversion measurement both sees the ROI of ad expenditures and improves ROI on future marketing campaigns, the social network added.

Conversion measurement is important for marketers who treasure actions done on their websites in direct-response industries, such as e-commerce, financial services, retail, and travel.

According to Facebook, its initial tests on conversion measurement with Optimized CPM had positive results for advertisers who focused on driving specific actions on their websites.

The company highlighted how online retailer Fab.com cut the cost per new customer acquisition by as much as 39 percent after using conversion measurement and Optimized CPM.

Mark Giangreco, digital director of the Democratic Governors Association (DGA), said they used both tools to deliver ads to users who were most likely to subscribe to the organization’s mailing list, and saw an 85 percent decrease in cost per conversion as opposed to any other digital campaign it ran on the Internet.

Conversion measurement is now available on Facebook’s Ads Manager, Power Editor, and to API partners via the Preferred Marketing Developer (PMD) Center.

To start,

(1) go to the conversion tracking tab in Power Editor using Google Chrome or to the conversion tracking link in ads manager,

Facebook Power Editor
Facebook Power Editor
Facebook Ads Manager
Facebook Ads Manager
Conversion Tracking
Conversion Tracking

(2) make a conversion tracking pixel and apply it on the conversion page,

Conversion Pixel
Conversion Pixel

(3) create ads and select “track conversions on my website for this ad,”

(4) specify your budget and select Optimized CPM.

Facebook’s conversion measurement system and Optimized CPM support all ads and sponsored stories on the platform, and combinations with any targeting abilities.

Facebook says its conversion measurement system supports cross-platform campaigns by reporting when a user sees an ad on a device and converts it on another – for example, a smartphone to a desktop computer.

Optimized CPM

Facebook says its Optimized CPM allows advertisers to focus on their marketing goals, and then with an automatic delivery system, it puts ads versus those goals in the best way available.

How satisfying a goal is to an advertiser is a good example that shows goals can be set in relative or absolute value.

However, these values are not bids.

To use absolute values in Facebook’s Optimized CPM, the bids are the value advertisers put on each connection, whereas in relative values, the bids are percentage points that show the importance advertisers puts on each goal, which must total 100 percent.

The company says its system automatically places bids on the advertisers’ behalf, although it stays strained by their fixed marketing budget and rigid values.

You can expect the overall campaign ROI to top either the cost per click (CPC) or the conventional CPM campaign, as dynamic bids grab the impressions with the highest values for your goals.

Facebook says advertisers can now make the best of their campaigns based on four goals: Actions (activities such as app installs and page likes, specified through conversion specs), Reach (the number of first times an impression reached a user within the day), Clicks (the number of clicks received), and Social Impressions (the impressions with social context, such as the names of friends on an ad who installed the app or liked the page).

Facebook says it will continue to build more goals while it develops Optimized CPM.

Goals for Ads

With variable levels of importance, the goal of an advertisement may be to increase the number of unique users, to demand traffic to a website through clicks, to draw fans, or to step up app installations.

Facebook says Optimized CPM requires the advertisement delivery system to use your specified goal values during the creation of an ad.

For example, you can improve an advertisement based on these absolute values: (1) page like action, at $1.00, (2) reach, at $0.05, (3) clicks, at $0.50, and (4) social impressions, at $0.20.

Simply put, the example shows that you value a user’s liking of the page at $1.00 each, reaching a unique user at $0.05 each, generating more clicks at $0.50 each, and bringing impressions with social context at $0.20 each.

This example shows that Facebook’s ad system will place a high value on impressions with more potential to convert.

Value allocation is also on the number of users who see at least one impression – Reach, on users who are most likely to click the ad, and on social impressions.

According to Facebook, advertisers must expect more actions from this advertisement compared to actions from a traditional CPC ad.

Optimized CPM can also distribute ads with only one goal: setting all values to $0.00 excluding page like action, in the example above, will fully gear the ad delivery system to generating Page Likes, but will likely have lower reach than the relatively more balanced design.

Budget and Pricing

An Optimized CPM marketing campaign requires a budget since Facebook’s ads system will bid on each impression in your stead – high bids for impressions that will most likely work for your goals but low bids for weaker impressions.

Facebook notes that each impression supports several goals, so it charges fees per impression just like with CPM.

Remember that dynamic bids allow Optimized CPM to use the impressions that are more likely to work for your goals, so expect the total campaign ROI to exceed your traditional efforts for CPC or CPM, adds Facebook.

Take note of your stats: each goal is in Ads Manager and in the API so you can see how each ad performs and measure the campaign’s success.