Cost Per Action (CPA) Bidding – The What, Why, Who & How

Cost Per Action (CPA) Bidding – The What, Why, Who & How

December 10, 2013

Facebook continues to expand efficiency and options for advertisers with new features to its mobile app advertising platform, the latest addition being cost per action (CPA) bidding for mobile.

What is CPA Bidding?

Until now, cost per click (CPC) and optimized cost per impression (oCPM) served as the standard bidding options for mobile ads on Facebook. Both CPC and oCPM leverage rich user data compiled by the social network to match ads to users that are likely to engage with that ad.

The new bidding option, however, further reduces chance and speculation in ad buys by linking bids directly to a more tangible result. Cost per action (CPA) bids are entered just as before into Facebook’s paid posting auction, but advertisers are charged only when a user performs the optimized action.

Why Should I Use CPA versus CPC or oCPM?

CPA bidding is beneficial in that it allows developers to better assess the value of ad buys by linking dollars directly to actions. Driving installs also carries the additional promotional benefit of improving an app’s ranking within app stores, thus making it more prominently positioned to potential customers browsing the app store.

Efficiency is the name of the game, and Facebook so far estimates an average of 20% savings, for comparable results, to advertisers who spend through CPA bidding. Ampush also recently found that CPA bidding lowered cost per install (CPI) by as much as 66% when used for mobile app install ads.

Who Should Use CPA Bidding?

CPA bidding works best for advertisers looking to attain a specific customer action, such as installing an app, clicking a link, or “liking” a page. Any advertiser whose campaign goal is to elicit an action from the viewer – which is most mid- to lower- funnel objective campaigns – should elect for CPA bidding.

How Do I Get Started?

Brands partnered with a Facebook Preferred Marketing Developer can hand over the reins from here; whereas those that are handling ad operations in-house should proceed as they would with other bidding options by first determining their bid. Facebook provides advertisers with suggested minimum, maximum, and median bids for those new to advertising on the social network or looking for additional guidance.

Although Facebook or your PMD will optimize your campaign to ensure you pay the least amount of money per action, it is good form to test ads for effectiveness throughout the campaign to ensure you are getting the most bang for your buck. For example, look to scale ads that perform especially well among your target audience, while cutting back or tweaking ads that may not be performing as well.

Overall, the addition of CPA bidding is sure to bring added benefit to mobile advertisers looking to drive measurable ROI through the use of ads on the social network.