You're Not Going To Like This!
It's a lot of competition! A Whole Lot of Competition in the Feeds these days!
Advertisers often complain about cost stability and an inability to scale. There are Facebook ad bid strategies that may improve these results.
Are you not getting the cost per event that you’d like? Are you having trouble maintaining a stable cost when raising your budget? Bid strategies could help.
Let’s take a closer look at these bid strategies, how they work, and how you might want to use them.
What Are the Current Bidding Strategies?
Facebook distributes ads based on an auction format. The costs that you spend to reach a user will depend, at least partly, on the bid that you make to reach that user.
In most cases, Facebook automates bids (this is the default option). But advertisers can choose to manually bid in an effort to better control their costs. The primary goal of a manual bid is to get cost per desired action (typically a conversion) down.
Facebook offers two bid strategies that can help advertisers achieve lower or more stable costs: “Lowest Cost” (the default) and “Target Cost.”
Lowest Cost: Bidding Strategy
The primary benefit of the “Lowest Cost” bid strategy is efficiency. Facebook tries to get you the lowest cost per event in the short-term.
The primary drawback of this bid strategy is that achieving those low costs may be short-lived. Results may be unstable as you spend more or competition increases.
Lowest Cost: Set Bid Cap
You can also set a bid cap if you want to control how much Facebook will spend for an event while using the lowest cost bid strategy.
You can tell Facebook what is the most you are willing to spend to acquire that event!
For example, if I have a customer that pays me $250 per month. And I want to start optimizing to get that customer. (I won't do this until I have enough events in a 7 day period to optimize for that specific event... FB says 50 events in 7 days is enough for them to know how to optimize for that pixel)
I can tell Facebook that I am willing to pay $250 to get that customer. I am willing to break even the first month to make profit the second month!
So you can see I am telling Facebook that I do not want to spend more than $250 to get a customer. Keep in mind I am optimizing for this pixel on my ad set level.
So if I am optimizing to get this event or conversion Facebook will help target my ads to the people it believes will likely be the ones that will take action on this event!
When using a bid cap, Facebook may struggle to spend your budget if you set it too low. However, setting a bid cap can help prevent an ad set from overspending for the event.
For example, if a particular conversion is worth no more than $2 for you, it prevents a cost per conversion of $2.50 or more. In that case, not spending your full budget may be a good thing.
When setting a bid cap, keep in mind that this is the most you want Facebook to bid for a single event. Since a bid is the most you’ll spend for that single event, you’ll usually spend less than that. I recommend testing an ad set by itself and seeing a difference in your CPA.
But Don't Let Facebook Guess
What that means is, if you do not have enough conversions for that event, Facebook will just guess who it thinks should see your ads. And that is a hit or miss! Most likely a miss!
However... If you have had people purchase your services and that pixel has fired to track those individual users, (Facebook says it is best to have at least 50 conversions within a 7 day window for it to track the best stats for you minimum) it does a great job as optimizing to help you get the best, cheapest cost per conversions.
Facebook recommends a daily budget that is at least five times higher than your bid cap. This is because Facebook states it needs at least 50 events (the learning phase) within a week to properly optimize.
Target Cost: Bid Strategy
The target cost bid strategy, it use to be known as “manual bidding,” is only available for the following certain type of campaign objectives such as conversions!
Facebook recommends using this bid strategy for achieving more stable results as your spend increases, but I have tested this myself in many accounts and we are not seeing stable results from it, more like increases in CPAs.
In the example above my target CPA is $4, and currently I am averaging a $2.54 CPA based on the last 7 days of data.
The main benefit behind this is the stability of our CPAs remain similar to the same when we are scaling fast on a winning ad set that is getting already 50 conversions in the last 7 days.
Often during the learning phase (before you get that many conversions) it sometimes gives you high CPAs at first because it tries to find the winners fast. Then once it has found the winners the costs stabilize.... Supposedly.
The only accounts we see this very successfully working is the accounts with very big budgets and have about 75 conversions or more in the last 7 days!
Another problem also is, Facebook will try to get you CPAs relatively around the target you set, even if they find targets that are cheaper the cost will still remain around the same. So therefore you may encounter wasted impressions!
Which One To Use?
I recommend testing them all in separate ad sets. Most people stick to the default or use lowest cost bidding. They may set a cap they don't want to spend beyond.
However... If you are running a longer term campaign target costs could work as well! It is just best to test to find out because results always vary from audience to audience, offer to offer and account to account.