How CTR, CPC, and EPC work to optimize Facebook ads
Published: November 24, 2014
Author: Joe Stanton
When advertising on Facebook, marketers will tell you to develop a system, and for good reason: it’s important to develop an awareness of how a traffic source behaves and get every bit of insight from your marketing spend as possible.
No one system is perfect, but I will layout some information that may help to provide some guidance when it comes to advertising on Facebook.
This post assumes you are familiar with Facebook ads, so I won’t be covering that part in this post.
To start out, set a baseline CTR (click-through rate). You will want to get an idea of the average EPC (earnings per click) before implementing such a rule, but I recommend a CTR of 0.10% as an initial baseline. Moving forward, you cut ads purely based on performance, provided they haven’t created conversions.
If an ad is profitable, only cut it if you have other, more profitable ads; otherwise don’t, regardless of the CTR.
Example: an ad gets 50 clicks at 0.065% CTR. Other ads are getting 0.11% or higher. However, this ad generated 10 installs/conversions off 50 clicks, and the EPC is greater than the CPC (cost per click). Don’t cut it based on low CTR if it is profitable.
When targeting ads based on demographics, learn the CPC trends for the demographics. At 0.2% CTR or higher, assuming you are targeting US residents, the ads may descend from an initial CPC of ~$0.50 and settle at around $0.25 – $0.27. Be sure to note these statistics. It is important to keep track of patterns so you can use these to determine where your CTR needs to be for a CPC that will generate profitable ads. A lot of the time advertisers already know how well their site or app install converts. You can use simple math to determine where your CTR needs to be in order to hit your CPC and EPC goals.
When using Facebook’s reporting, and if you have their tracking pixel implemented, always compare their data to your own. I would always recommend using an internal or 3rd-party tracking tool. Facebook misses conversions often and sometimes they appear on the wrong ads – either because of errors or, more likely, someone clicking more than one of your ads.
Use this knowledge of how CTR influences CPC to make decisions on campaign potential.
Have an ad that is nearly break-even? Remember, images are the most important factors to split test at the start, but you don’t have to stay in that mindset forever. Try launching a new campaign with the same image but tweaked ad copy. Keep testing until you find the right formula and achieve the results you are looking for.
If you want to succeed on Facebook, then pay attention to the data. It will cut your time to profitability down drastically.