I've recently taken it upon myself to dig into the complicated landscape of programmatic digital marketing, and I wanted to share some thoughts and research that I've come across with Facebook in particular.
In short: Clicks and impressions do not matter.
The old-fashioned bidding structures of display and social media are slowly becoming obsolete. Ten years ago when someone wanted to run display advertising across a network of websites and get a guaranteed rate, the only options were impressions and clicks. For example, if I wanted to have a market standard for how much I paid for impressions (CPM), I would pay $3 for 1,000 impressions of an ad. If I wanted to pay for actual clicks, I would bid $.35 on a cost per click (CPC,) regardless of the impressions, and regardless of the actions taken afterwards. Since these methods of advertising are easy to guarantee and easy to compare amongst other ad networks, they are still used.
Why they are outdated in 2014.
Advertisers are starting to find more value in bidding on conversions and acquisition (CPA,) than they are with impressions or clicks. This CTA model is best utilized with programmatic platforms. Programmatic, for those not familiar, is the automation of bidding, ad placements and optimization of digital media. Instead of relying on humans to manually figure out and adjust where media is being displayed and how much to pay for it, most ad networks are building out programmatic platforms to automate the process. There are a couple of reasons why this is happening. The first reason is because of competition. The competitive landscape of digital advertising is exhausting, and the only way to have a competitive edge is to have superior algorithms and intelligent, automated optimization systems. The second reason is because it is proving quite difficult to relate impressions and clicks with success and ROI. Just because someone sees or clicks on an ad, doesn’t mean that they are likely to engage or purchase anything. Ads could be served to a million people, but if they aren’t the right audience, then it’s wasted advertising. Programmatic platforms are optimized for people who are likely to convert, not just click.
Why clicks and impressions don't matter:
The beauty of programmatic buying is in the way that it optimizes campaigns. Instead of trying to achieve a goal of the lowest CPM or CPC, an advertiser should be trying to focus their direct response media to very specific and measureable goals. If the goal is coupon prints or leads, programmatic platforms record and analyze unique data about people who have performed actions on your advertisements. (If you're just interested in impressions or brand awareness, then my follow up article will be for you.)
Here's an example:
A brand wants to run a Facebook campaign with the goal of coupon prints. Initially, the platform will start off with high impressions and average click-through rates to the coupon. However, a tracking pixel was placed to record the action of printing the coupon, but not to record other actions. After a large enough audience has printed these coupons, the programmatic platform compiles thousands to millions of data points from these highly engaged users, such as interests, affinities, purchase habits, and demographical information. Facebook then matches all of the unique data from these specific users to create a new audience of people who are similar to those who printed coupons. These new audiences, (called lookalike audiences) begin to receive a bulk of the advertising, instead of general interest-targeted audiences. The bidding format is called Cost Per Conversion, CPL or CPA, and is measured by the cost of media paid divided by the amount of people who printed the coupon. When this happens, impressions drop (due to a smaller, more refined audience), the cost per impression varies (because of the hyper-targeted and more qualified audiences, but also the quality and creative of the ads), click-through rates will vary (because the audience is highly qualified to print coupons, but less likely to be just "Clicky"), and total clicks will generally decrease - particularly with Facebook.
Let me explain why the clicks decrease.
Clicks decrease because fewer people are seeing the ads and media begins to avoid serving the ad to people who only like to click on things. The programmatic platform begins to serve ads to people who will print the coupons, and not the people who like to click on anything shiny. Facebook, along with other data and research companies have done many studies in regards to clicks and ROI (see image attached) and have found that clicks don't correlate to success. If you are bidding on serving ads to people for more clicks, chances are, you're wasting you or your client’s money when compared to the programmatic approach.
Some people will click on anything and are a waste of money. It's as simple as that.
If you are focused on direct-response objectives like coupon prints, email signups, registrations, purchases, downloads, or anything similar, your primary focus should be on your cost per lead, not your impressions or clicks. In another post, I'll discuss why you should separate campaigns and platforms when you have direct-response objectives as well as reach and brand-awareness objectives.