Reducing Wasteful Spending on Facebook Ads: CPC, CTR, and Other Garbage Metrics for Garbage Thinking
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--- CPC, CPM, CTR, and more...To know which metrics don't help at all when making money on Facebook is the goal!
Some of the most commonly talked about metrics that people use are cost-per-click (CPC) and click-through-rate (CTR).
These are very important when you’re dealing with demand and inventory-based platforms like Google, Amazon, and programmatic display.
However, when it comes to Facebook, these metrics are more or less IRRELEVANT. Let me tell you why.
Facebook utilizes what is called an optimized CPM algorithm. It tries to accomplish its business objectives of keeping somebody on the platform for as long as possible. This means that Facebook is optimizing towards time on site, which is the exact opposite of what Google and Amazon etc. prioritize.
So why are metrics like the cost-per-click and click-through-rate irrelevant? This is because of THREE big reasons.
Reason #1: Facebook is optimizing for the quality of the user experience and each user is of different value to us as advertisers. This means that the unit value of a click can vary wildly.
Reason #2: Facebook controls the user flow across multiple platforms. Instead of focusing on the lowest cost traffic or the ad that is most likely to get a click, what we need to do is to optimize the ads that drive the highest-quality users, and cater to the user flow as a priority.
Reason #3: On Facebook, we cannot optimize with conversion campaigns to the cost of a click. We also cannot optimize the rate of a click. Very often on Facebook, lower-cost clicks or ads with a higher click-through rate generate too many lower-quality users.
If we try to optimize towards the cheapest traffic, much like in lead gen, the lowest cost is rarely ever the highest quality.
So be warned when you hear somebody talking about what I like to call “garbage metrics” for “garbage thinking.”
If somebody tries to talk to you about the value of an actionable metric that does not lead to a quality user, you know that that person does not understand what they are talking about and/or does not have your best interests in mind.
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