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How Facebook Advertising Works

Facebook supports both cost per click (CPC) and cost per thousand impression (CPM) ads. You can advertise on Facebook using normal display Facebook advertising or using a type of Facebook ads displayed on Newsfeeds called Sponsored Stories. In this article, we will be looking at Facebook ads.

Facebook Display Ads

Facebook display ads appear in the right side bar. These were the first types of ads available on Facebook. With this type of ads you compose your message, target your audience, choose your bid type, set your bid price, set your maximum spend, add payment details, and submit. Once your ad is approved, it will start appearing whenever a Facebook user who is within your target audience views a page on the social networking site.

You can bid for Facebook ads in two ways: cost per click (CPC) or cost per thousand impressions (CPM). In the case of CPC, you pay for each click on your Ad. So, you are billed each time a Facebook user finds your ad interesting and clicks on it. In case of CPM, the Facebook user need not click, once your ad loads whether or not the user even notices the Facebook ad, you will be billed.

The catch is that cost per impression is cheaper than cost per click. For example 1000 impressions may cost around 200 Naira, while one click may cost about the same amount. The bid type you use for your Facebook ads depends on what you want to achieve. We will look at that after discussing the second type of Facebook ads.

Facebook display ads are your standard Facebook ad. You use them to promote your business, fan page, website, products, and services. Once you know your target audience well, Facebook offers you tools that enable you target potential customers for good value for money.

Facebook Sponsored Stories

Facebook Sponsored stories are a unique type of Facebook ads. It is more social and could be considered less intrusive than display ads by users. Facebook Sponsored stories enable you highlight news feed stories of interactions Facebook users have with your brand.

You can select the types of interactions you want highlighted such as a like on your fan page, a comment or like on a post on your Facebook Timeline for business page, or a like or share on your website.

For example, if you setup Facebook sponsored stories for likes and comments on posts on your fan page. When a user comments on or likes the update on your Facebook page, a story of the event/activity will be highlighted on the news feeds of their friends that way their friends will learn about the activity and may also interact with your Facebook page.

Facebook sponsored stories are great for building your brand and creating awareness about your business like product launches, enticing offers, etc. Like normal display ads, Facebook sponsored stories can be bid for on CPC or CPM basis.


Wondering which bid method is the better CPC or CPM? Well, it depends on you or what you want to achieve at the end of the day. If you know your audience well and if you target them properly, you can make a killing with CPM. CPC is for when you do not want to take any risks or do not know how to target your audience.

In CPC ads, you pay for the clicks, so you can easily calculate what you are paying. Choosing CPM without proper targeting can lead to very poor performance. CPM requires more experience to take advantage of. In order words, CPC is more beginner friendly, while CPM requires some advanced skills to use successfully.

CPM is the preferred choice if you want to simply promote your brand. You do not care about the click, all you want is for as many Facebook users as possible to see your ads and learn about you. Such a Facebook ad campaign only makes sense with CPM.

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