Facebook Ads CTR Skyrockets – Good or Bad for Facebook Advertisers?

According to Adobe’s Social Intelligence Report  published in October, 2013 and based on consumer data (2012-2013) analyzing 131 billion Facebook ad impressions, the following changes have occurred year over year:

  • CTR has increased by 275%
  • CPC has decreased by 40%
  • CPM has increased by 120%

While it is wonderful that CTR has increased so significantly, it is important to understand what this means to you as an advertiser, and what it means for your optimization efforts.

1- Evaluate CTR in the context of conversion costs.  A High CTR by itself is NOT a good metric.  If you don’t account for actual conversion costs, you may be wasting a significant amount of your marketing investment.  I still find clients optimizing the performance of their Ads for CTR only. Unfortunately CTR only tells you if your prospects liked your ad. It doesn’t tell you if there were any conversions.  See example below for 2 Ads driving installs of an app:

fb ctr

 

Although Ad2 has a higher CTR, the fact that the conversion (# of Installs) is so much lower than for Ad1, it makes it a nonperforming Ad with CPIs (Cost per install) of $67 instead of $5 for Ad1.  In this case Ad1 is a much better Ad as it reaches its goal at much lower costs.

2- Optimize your Ads selecting CPM or CPC for lower Conversion Costs. Should you run your ads using CPC or CPM? the answer is it depends.  CPC and CPM will vary depending on the audience you are trying to reach (geographies, gender, age). There is no way around it but to test it.  For a specific audience run similar ads using CPC and CPM. Once you have sufficient data, compare conversion costs and keep the ones that give lower conversion costs.

 

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