Facebook was frustrated with the low cost per click their ads were generating with their original bid per click or bid per thousand impressions interface. To increase their revenue, they found a workaround to this called "optimized CPM" which they now use as the default setting. The key is that most do it yourself Facebook advertisers and even many seasoned veterans of Facebook ads had no idea what happened in the background with this change.
For those that paid close attention to the change, we noticed that sometimes campaigns using optimized CPM would work amazing and other times they would work unbelievably bad. With no way to understand how the system was generating the price, Facebook eventually added a tool in the power editor where you could both learn more about optimized CPM and control the results a bit better. Take another look at the screenshot above now.
Do you notice anything that looks out of place? How about a $10 per action bid? How likely are you to bid $10 on a specific action such as a like, a photo view, or a share? If you said never, you would be correct! The new optimized CPM system basically gives Facebook free reign to charge you whatever they want! If they get you good results sometimes then you will keep spending your money with them. If every few days per week when ad prices get more competitive you get absolutely awful results, you now know why!
This default bid leaves you exposed to any sudden shifts in advertising prices. Prior to introducing this advanced bidding tool, my campaigns in third world countries had days where the cost would be higher than US prices which are normally ten times the cost of running ads in emerging markets! What I liked even better was that I was guaranteed to waste the entire budget my first day as the maximum bid allowed Facebook to charge me top dollar for my ads. Hundreds of campaign budgets wasted the first day means I lost thousands of dollars unnecessarily bidding high.
What can you do to fix it? First, you have to have Google chrome, know how to use the power editor, and not pull your hair out from all the bugs it has. If you can get that far, you have a chance to fix the optimized CPM campaigns in the "pricing" tab. See below.
These are the bids I am now trying for my new campaigns to find the ideal settings. Instead of bidding $10 for someone in Indonesia to view my photo, now I have a max action cost of 5 cents. Magically, I get 40 to 100 likes per dollar now the first day of showing my ads instead of 5 or 10 using the exact same settings in other areas. I also do not have to worry about having a bad day where I basically throw my budget away with no results. I get the benefit of the increased potential of the optimized CPM campaigns without giving Facebook a blank check!
If you are using optimized CPM campaigns on Facebook, I hope this post helps you get better results!