Music Business

Gone Is CPC, Long Live CPO (Cost Per Outbound Click)

In the wake of a recent lawsuit against Facebook as a result of the company committing advertising fraud, Jason Hobbs takes a look behind the scenes to explain how artists may be getting swindled by focusing on the wrong metrics, and should instead direct their attention on outbound clicks taking fans away from the social media platform to the artist’s page.

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Guest post by Jason Hobbs (found.ee CEO)

We’ve all read about the class action lawsuit against Facebook accusing them of intentionally committing advertising fraud. According to CBS News, the plaintiffs claim that “The social media giant committed fraud, knowingly inflating the amount of time users viewed videos by as much as 900 percent for more than a year, causing businesses to spend more on ads than they otherwise would have.”

This subsequently resulted in Facebook paying advertisers a 40-million dollar settlement

For a long time, Facebook appeared to be a panacea for the low and mid-budget ad spends – the type the music industry prioritizes. They started as THE place to reach a large, targeted audience for a relatively low investment. Then the ad agencies started discovered something: the numbers just don’t add up. 

As AdStage and eMarkerter have reported, Facebook’s CPMs and CPCs have increased significantly over the years. Yet the narrative of Facebook’s supremacy persists.

While compiling our own Q3 Benchmarks, we studied the performance metrics of ten highly-regarded record labels. The results may surprise you. First, average CPCs are a little bit better than analysts like eMarketer, AdStage, or Forrester report for Facebook. That looks great on paper, but it’s not as good as we’ve all been led to think. Facebook floods the zone with erroneous metrics that seem intent on misconstruing actual performance.

If your actual objective (note: this is NOT your FB setting called “objective”) is to drive your fans to Amazon to purchase a vinyl LP, or to AXS to buy tickets, don’t measure your CPE (Cost Per Engagement). That’s just a number that Facebook likes to show you because it helps campaigns look better than they are. CPE measures how much money you’ve spent turning Facebook users inward to engage Facebook. You’re spending money to help Facebook with their on-platform engagements. They should be celebrating you for this.

Another subtle one is the blended Cost Per Results. Again, these are not the pure the results you really want. Rather, this metric blends engagements and other objective metrics into a sort of metric soup so that it obfuscates performance rather than illuminates it.

If your goal is to drive people outside of Facebook’s ecosystem to take an action that has a real business impact, then you must measure Cost Per Outbound Click.

[These above examples are from just one Facebook Advertising account that’s spent hundreds of thousands of dollars on Facebook advertising, and these are the averages from that account. The same account is expanded below.]

Let’s take a deep look at the delta between your number of outbound clicks and landing page visits. In this example (from the same data set above), the discrepancy is nearly 30% when you consider Outbound Clicks to Landing Page Views!  In this case over 545K Outbound Clicks to 392K Landing Page Views.

How can this be?

Because clicks are captured instantly, it’s highly likely that they will outnumber sessions. There’s a multitude of reasons for this, including cicks by non-interested parties—meaning people who are just browsing or accidentally click your ad (followed by a quick exit from the page before it loads).  Ever looked at your post clicks and your Google Analytics and noticed that the numbers are far from the same?  And what about the bots? Bots play a factor as well. According to click fraud protection software company ClickCease™, “Bot traffic is any non-human automated traffic that goes through your ad. Frustratingly, bot traffic does still count as a click, even though there is no chance of a sale or interaction from it.”

Maybe Facebook is the real victim here. A victim of bots, or thumb slips. Or maybe there’s more opportunity in showing metrics that encourage actions that benefit Facebook’s own platform. Either way, the next time you log in, edit your standard view to add Custom Columns and take a look at your actual Outbound Clicks and Cost Per Outbound Click to see just how far off they are from the CPE or Cost Per Result Facebook prefers you stay focused on. The cost difference might shock you. 

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