What is an impression on Facebook advertising?

Why would an advertiser want to pay per impression rather than per click in a web-based advertising system such as Facebook Ads or Google AdWords?

• Answer:

  The main reason an advertiser would want to use a CPM pricing option is to guarantee delivery of their ads.  When the CPM option is used by advertisers, they are generally agreeing with the publisher (in this case Facebook) to a fixed price (e.g. 5.00 CPM), fixed delivery ( some certain amount of impressions e.g. 2M impressions), fixed timing (e.g a 2 day campaign), and fixed placement (e.g. a banner or medium rectangle position on a website's homepage). In the specific case of Facebook, placement isn't important since there is only one placement within social ads. For publishers, CPM campaigns get right of first serving since they represent committed dollars. The publisher typically serves all of these ads first because the publisher and advertiser have entered into a contract that makes the dollars a sure thing.  Publishers (Facebook or whoever), generally prefer sure things to performance based opportunities. CPC or CPA deals are performance based campaigns. The best way to think about these pricing options is in terms of balance of risk. In a CPM campaign, all of the risk for ROI from a campaign, is on the advertiser. The publisher delivers the ads for the advertiser, but it is COMPLETELY up to the advertiser to have a compelling message or call to action to make the campaign successful. In a CPA campagin, where the advertiser only pays the publisher based on a successful action (a sale, an email, a lead form etc) the risk for the campaign is COMPLETELY on the publisher and the quality of traffic. If the users visiting the publisher's site don't convert for the advertiser, then the publisher doesn't get paid no matter how many views or clicks the publisher drives. In a CPC campaign, the risk for campaign ROI is basically split between publisher and advertiser. The publisher needs to deliver an audience that clicks on ads and the advertiser needs to have compelling message and call to action to convert those clicks into sales. They effectively split the risk.  For an advertiser, the effective CPM (eCPM) for a cost per click (CPC) campaign could be much lower than a CPM campaign, but here is the catch: there is no guarantee that the advertiser will get all of the impression volume they desire. The CPC campaigns will only get access to the volume of inventory that is left after all of the CPM campaigns (sure things) are served. In the case of Facebook, which has lots and lots of traffic, getting access to inventory isn't too much of a problem, but in the case of specialized website like a video game site, it may be very difficult depending on the time of the year the advertiser is targeting a campaign. (e.g. during Christmas time these types of sites are almost 100 percent sold out of inventory, so they don't have anything available on a CPC basis.) Ultimately, If the advertiser has a good understanding of the performance of their campaigns (click thru rate and conversion rate) so that they can "back into" a CPM price, then the reasons an advertiser would (and should) select a CPM option is: The product is time sensitive (e.g. selling Turbo Tax software around March and April) and to make specific sales targets, the advertiser knows they need a set amount of inventory. No one is thinking about taxes in June, so the time to get maximum sales at the cheapest price is when user's minds are most on something like taxes. In this case, the 6-8 weeks leading up to April 15 is the time the proverbial "iron" is hottest for these advertisers. The publisher's internal inventory marketplace is hyper competitive for CPC priced inventory. An example case with Facebook is social game developers. The desire for CPC based inventory on Facebook to drive game installs is extremely competitive. If you launch a game and want to absolutely ensure that you will get a set amount of players, then you may have to do part of your spend on a CPM basis because if you do CPC and Zynga releases a new game and a large ad spend to support it, you may not get the volume of installs you desired.  If the advertisers have a good understanding of the math behind monetization and the effectiveness of campaigns, it may be fine to lean forward with the risk of a CPM campaign. If the advertiser doesn't, then the approach is risky. There are some nuances to this, but thats basically it in a nutshell.