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Facebook bidding strategies can be very confusing for new users, especially if you have no marketing experience. Understanding these bidding strategies can also be time consuming and if you don’t know how to use them, they can cause problems for your accounts without you realizing it. In this blog, we’ll dig deeper into the three main bidding strategies and how they can help you with your ads. Hopefully, you will have a better understanding of each strategy and can use them to your advantage.

Definition of Facebook auctions: « An auction represents what you are willing to pay to get the desired result from a member of your target audience. »

Lowest cost (default)

Lowest cost is the default setting for all ad goals on Facebook and if you’ve served any ads on Facebook, I can guarantee they served the lowest cost.

How does the lowest cost work?

Lowest cost auctions aim to get the most results for your budget, regardless of the cost. The lowest cost bidding strategy tells Facebook to bid for the lowest possible cost per optimization event (leads, purchases) while spending your entire budget at the end of the day, at the end of your ad set, or at the end of your campaign calendar.

Benefits:

  • Get the most volume without a CPA in mind
  • Spend your allocated budget
  • Good if you don’t have any KPIs or goals in mind
  • Great for website traffic, audience, engagement, and video view goals
  • Tends to get cheap CPC, engagement and audience and impression costs
  • Identify your average cost per result / action
  • Probably come out of the learning phase

The inconvenients:

  • High and expensive cost per result / action
  • No control over your CPA, CPC, CPM
  • Not recommended for long term use

When to use this bidding strategy:

I recommend using the lowest cost for website traffic ads, audience ads, and engagement ads. This will give you the most results possible, although these lenses tend to be quite inexpensive, you won’t need as much control. Using the lowest cost for conversion, leads, and app installs should be used lightly and only near the start of your advertising journey. Use it to find your average CPA. If you find that your CPA is extremely high, it may be a good idea to start looking at the cost or bid cap. If you are comfortable with the CPA you have received, we recommend that you leave the lowest cost strategy on your ads, but be sure to monitor costs closely as you may start to saturate your audience. and you will see unexpected CPA costs. CPA differs from company to company and product to product, and some industries have higher CPA than others. It is essential to identify your average costs and calculate them against your margins.

Cost cap

Facebook says, « It’s important to remember that the more you control costs, the more constraints you place on our platform to find opportunities at lower cost for the results you want. »

How does the cost cap work?

With cost caps, you’ll have more control over your bids. By setting a cost cap, you are telling Facebook to get the most volume for your benchmark cost. For example, if you have a cost cap of £ 10, you tell Facebook that you don’t want to spend more than £ 10 per result / action.

Benefits:

  • Checking your CPA
  • Stay in line with KPIs and goals
  • Get volume without sacrificing control
  • Ideal for conversion goal ads, lead generation, and app installation
  • Cheaper CPA
  • Ideal for strict CPA goals

The inconvenients:

  • Limit your budget
  • Budget may not be fully spent (slower ad spend)
  • Will probably remain in the learning phase
  • The cost may increase as the budget increases
  • The ad may not be showing
  • Depends on audience size

When to use this bidding strategy:

I recommend using cost caps when you have a strict CPA goal in mind. In my experience this works best for lead generation ads, we have also seen good results when using it on conversions, but keep in mind that if you increase your budget you may see fluctuations of your CPA. Feel free to test this on website traffic ads if you think your CPC is high. We don’t recommend using it for audience or engagement purposes as it can slow down your spend and your ad may not show at all.

Bidding cap

How does the Bid Cap work?

With the bid cap, you tell Facebook how much to spend in the auction. For example, if you set a bidding cap of £ 5, you tell Facebook that you want to spend £ 5 or less to get your ad to show, and not a dime more, when you are competing against others. advertisers for the same audience. This bidding strategy provides the best control over your ads and is generally a preferred bidding strategy on Facebook. The auction is not the same as your average cost of results / action.

Benefits:

  • Controls how much Facebook can bid in the auction
  • Tightly control the cost of your optimization events
  • Will not spend more than the desired bidding limit per auction
  • Beat your competition at auction

The inconvenients:

  • Expenses may be limited
  • Does not control the CPA
  • Requires more frequent bid changes
  • You must calculate the bids based on the projected conversion rates
  • Can’t spend full budget
  • Will probably remain in the learning phase
  • The ad may not run if the bidding cap is too low

When to use this bidding strategy:

We recommend that you use this conversion bidding strategy to control how much you’re willing to spend to show your ad to your audience. It’s best to set your bid limit to double your CPA goal. We have worked to make it work best based on our results; However, every business and industry is different, so start with a low bid cap and increase based on delivery.

Use this information to your advantage and use cost and bid caps for high CPA ads. You should be able to see a difference in just a few days. Hope this gives you the information you need to proactively control your ads. For more advice on Facebook ads, be sure to read our other blogs.

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