Facebook ads bidding has a huge effect on your ad results.
If you want to beat your competitors to the Facebook ads race, it’s not just the shiny ad design and powerful copywriting that you need to master.
You also need to know how to target the right Facebook audience and optimize your ad bidding.
What’s the point of a great ad or a carefully selected audience if you’re then screwing everything up with the wrong bidding strategy? You may end up either paying too much for your campaign or reaching a small portion of your potential reach.
This article includes all the information you need to know about Facebook bidding. We’ve just updated it with the latest news and insights to give you the timely overview you need for best ever campaign results.
If you fail to place the right ad bids, two things might happen:
- You’ll pay too much for your ad results.
- Your ads will never get delivered due to low ad bids.
- So how can you choose the right Facebook bidding strategy? In this article you’ll find all the information you need. But first…
we’ve noticed a couple of changes in the Facebook ads bidding in these past few months.
It’s up to you: read the entire article or click here to go straight to our 2017 update.
If you’re interested in the whole picture… Let’s get back to the drawing board and study Facebook Ads Bidding!
Bidding? Is this an auction?
Yes! That’s the first thing you need to understand to master bidding management of Facebook Ads. When you’re creating a new campaign, you’re joining a huge, worldwide auction.
You’ll be competing with hundreds of thousands of advertisers to buy what Facebook is selling: Real estate on the News Feed, Messenger, Audience Network, and mobile apps to display your ads to the users.
While Facebook will try to satisfy every advertiser, even with 1.79 Billion monthly users, the space for advertisement is limited. Sometimes, Facebook won’t be able to fulfill all the requests. When this happens, the highest bidders will get the most impressions.
However, there are three factors that contribute to your ad delivery: your bid, relevance score, and “estimated action rates” (We’ll talk about these later in this article). So the highest bid doesn’t always win.
The amount you bid for a click –1,000 impressions or a conversion — is not what you’re actually going to pay. It’s just the maximum amount you’re willing to pay to win the bid. Facebook (and Google AdWords) will always make you pay only the lowest amount possible to win the bid and have your ad displayed.
Let’s map out an example, assuming that Facebook only has 3 available spots to display ads and there are 4 advertisers bidding. The real system is much more complicated than this; this is an hyper-simplification:
Advertiser A bid $0,3
Advertiser B bid $0,5
Advertiser C bid $0,5
Advertiser D bid $10
In this example, advertiser A will likely be left out and will receive low to zero impressions. Advertisers B and C will get a good amount of impressions at a price somewhere between $0,31 and $0,5. Advertiser D will probably get more impressions at a price just slightly above those of B & C. Around $0,35 and $0,6. No way is he going to pay $10!
There are two important takeaways here:
- If you try to bid too low, your campaign may not get the exposure it deserves, and you won’t reach your goals. Remember, you always get what you pay for.
- Don’t worry about bidding a high amount. You’ll still end up paying the lowest amount possible in the auction to get your ads delivered.
Facebook Ads Bidding Strategies
Just a couple of years ago, life as an advertiser was simple and straightforward. You could only bid for your ads by Clicks or Impressions. With the incredibly fast evolution of Facebook’s advertising platform, however, modern advertisers have to deal with many bidding strategies: CPC, CPM, Conversions, Daily Unique Reach, Post Engagement etc.
Unsure what do these complex words mean? Let’s go through each one and try to understand when you should use these and how.
With CPM (Cost Per Mile) bidding, the amount you’re bidding is the maximum you want to pay to deliver 1,000 ad impressions to the members of your target audience. CPM is the most unpredictable bidding method, and you may want to stay away from it as you might spend lots of money without any results.
Big brands may want to use CPM since it’s the most likely to deliver a lot of impressions. If you’re not really looking for specific results, but just want to create brand awareness by displaying your brand to a wide audience on Facebook, CPM could be a good fit.
Once the most used Facebook bidding strategy, CPC (Cost Per Click) allows you to bid for clicks. This means that you’re going to pay only when a user clicks on your ads. Sounds great, doesn’t it? Your banner could be displayed 1 billion times without you paying a cent if it doesn’t receive clicks.
In 2015, Facebook changed the CPC bidding method so that you won’t pay for any kind of click on your ads (e.g. like, a comment, a share, a click to a website, “continue reading,” etc.)
Now, the CPC accounts for what Facebook calls “link clicks” — i.e., the clicks related to certain ad objectives:
- Clicks to visit another website
- Call-to-action clicks that go to another website (i.e., “Shop Now”)
- Clicks to install an app
- Clicks to Facebook canvas apps
- Clicks to view a video on another website
When bidding on CPC, keep in mind one thing: Facebook, of course, wants to maximize profits. If your ad is has a low relevance score and nobody’s clicking on it, Facebook will soon stop delivering it. After all, it’s more profitable for them to have a $0,1 ad that gets clicked 1,000 times rather than a $5 ad that gets clicked only 5 times.
The is key to effective CPC bidding is this: The higher your CTR, the lower your CPC. In the end, a higher click-through rate will grant Facebook the highest revenues.
Bidding on Conversions
When you bid on Conversions, Facebook will do its best to deliver your ads to the target audience members who are most likely to convert — to fill your ad set’s objective.
The type of conversions depends on your campaign objective. If you select the Page Likes campaign objective, bidding on Page Likes is actually bidding on Conversions. When your ad campaign’s objective is to get more leads, the conversion will be getting a new lead, etc.
Bidding on Conversions will most likely bring you the best campaign results, as Facebook will deliver your ads to people who are most interested in your offer.
If you bid on Conversions and place a manual bid, you can tell Facebook how much you’re willing to pay for a conversion (e.g. a Facebook Page like or app download). When bidding on Conversions that happen on an external site, make sure that you have the Facebook Pixel installed. Otherwise, Facebook won’t be able to gather results and optimize your ad delivery.
A Facebook Ads bidding experiment…
Here at AdEspresso, we don’t like talking without supporting what we say with data. So, we did a little experiment and created 4 identical campaigns to drive likes to our Facebook page (you can also check out Jon Loomer experiment).
Each campaign had the same budget, ads’ design, and targeting options. The only difference was the bidding strategy used: CPM, CPC, oCPM, CPA (note that by 2017, the bidding options have changed, as explained above). Let’s see how they performed using AdEspresso‘s campaign comparison.
While this is just a small experiment with a low budget, it mirrors what we see across millions of dollars of campaigns going through AdEspresso. Let’s see what we’ve got:
- The CPC campaign generated the highest number of clicks. However, only 20% of those that clicked then liked our page.
- The CPM campaign delivered a huge amount of impressions: 316,100! However, the return was little: 2 Likes.
- oCPM, as we had imagined, was really good at delivering our ads only to interested people: With only 8,000 impressions, it set the record of 53 likes with the lowest cost per like at $0.982. Thought it had a few very expensive impressions, it was a great overall ROI.
- The CPA campaign also performed really well and lost to oCPM by an insignificant $0.073 regarding cost per like. However, it required 2 times the impressions of the oCPM campaign to achieve this goal.
Facebook never sleeps and we’re seeing slight changes to the ad platform month over month. In fact, you can find all the latest news in this article about Facebook updates.
The biggest change in Facebook’s bidding tactics is this: When you optimize your ad delivery for Conversions and select the manual bidding method, you can choose between maximum and average bids.
As you select the “Average” bid, you’re telling Facebook what’s the average sum that a conversions is worth for you. Facebook will do its best to deliver you most results while staying in the limits of your budget and bids.
When setting up an average bid, Facebook will use a method called pacing. Pacing helps to avoid using the entire budget at the beginning of the day with the chance of missing out on lower-cost conversions in the other half of the day.
With pacing, Facebook will get you conversions that are a lot lower than your average bid, but will also deliver some more expensive conversions. As a result, you’ll get more conversions at your wished average cost.
In the example below, imagine you have a budget of $50 and set your average cost bid at $10. In this scenario, you’d spend $48 of your budget for 6 results at an average of $8 each.
When to use the maximum bid: If your goal is to maximize profit and get leads at a low cost, set up the maximum bid.
When to use the average bid: If your goal is to maximize the ad delivery and get as many conversions as possible (even if they cost a little more), place an average bid.
Where to Customize & View Your Bidding Options
To customize and view your bidding options, go to the “Budget and Schedule” section. This can be found in the Ad Set part of Facebook campaign creation. You’ll see “show advanced options” underneath where you can set up additional bidding options.
In the Advanced Options section, you’ll be able to choose what you want to optimize your ad delivery for, set manual bids (if you choose to use them), and decide what you’ll pay for your results.
Now that we’ve got the basics covered, let’s take a closer look at some of the Facebook Ads bidding options.
Choosing Your Optimization
Previously, when you optimized the ad delivery for Clicks, you typically paid on a CPC (or Cost Per Click) basis. If you optimized for Conversions, you’d pay on a CPA (Cost Per Action) basis.
Now, when you choose what the ad delivery optimization method, you’re choosing which groups of people you most want to see your ad. If, for example, you optimize for Conversions, Facebook will show your ad to the users who are most likely to convert. If you choose to optimize for Post Engagement, Facebook will deliver your ads to the people who have commented, liked, and shared your ads in the past, etc.
Almost all ad objective types will allow you to optimize for:
- Conversions – Optimizing your ad campaigns for Conversions is Facebook’s recommended bidding tactic. By using this method, Facebook will deliver your ads to the people who are most likely to convert, so that you’ll get the most results at the lowest cost.
- Link Clicks – Facebook will focus on getting users to click on your ad to follow the link. If you’re trying drive more traffic to your landing page, or to view your Facebook Page, CPC can be a good option.
- Impressions – This option focuses on showing your ads to as many people as possible. This is great for businesses looking to build brand awareness or to remind a remarketing audience of a limited-time offer. Unlike with Conversion-optimized bidding, when bidding on Impressions, Facebook won’t optimize your ads to be delivered to the most engaged audience. It will simply deliver your ads to any audience members as many times as possible.
- Daily Unique Reach – Selecting the Daily Unique Reach bidding method allows Facebook to deliver ads to people up to once per day. This could be a good idea when targeting a small remarketing audience or whenever you want to make sure that your ad reaches all audience members. If you’re worried about high ad frequency, Daily Unique Reach bidding could be a good way to keep it low.
- Post Engagement, – When choosing the Post Engagement optimization, Facebook will deliver your ads to people who are most likely to like, share or comment (engage) with your ads. This could be a good option when promoting your blog articles on Facebook.
- Brand Awareness – Facebook will prioritize showing your ads to those who will pay most attention to them. They may “survey a small section of your audience” to deliver the most brand awareness.
- Leads, coming with the lead gen objective, which will show your ads to those who will be most likely to share their information, and it will do so at the lowest cost possible.
Does Optimization Affect Cost?
Here’s the thing: optimization can affect your cost, even if it’s not immediately obvious as to how and it’s difficult to track accurately. You can run the same ad, in other words, with two different optimizations, and get different costs and results.
Here’s why: the audience members who sees your ads will be different based on what you optimize for. Some audience members may not be as likely to take certain types of actions as others; some will always click on an ad, for example, but others will only ever comment on one. This can affect action rates and relevance score, which can directly influence cost and whether your ad is prioritized.
So what about CPC, CPM, and CPA?
In Facebook advertising, your bidding options depend on the campaign objective. For example, if you campaign objective is set to Brand Awareness, you won’t be able to bid on conversions (as there is no conversion).
Here’s a list of campaign objectives and their matching bidding options:
- Conversions, which lets you bind on Conversions, Link Clicks, and Impressions
- Traffic, which lets you bid on Link Clicks (CPC) and Impressions
- App installs, which lets you bid on App Installs, Impressions, and Link Clicks
- Video views, which lets you choose between 10-Second Video View and Impressions
Factors That Affect if You “Win” The Bid
So how do you make sure that you “win” your bid, as Facebook puts it? There are a few factors to keep in mind, all of which influence whether or not your ad will be shown to the people you most want to see it.
- Your bid. Facebook bidding is an auction, so it only makes sense that the more you’re willing to pay, the more likely you are to win. If you’re going with automatic bidding, there’s a good chance you’ll be just fine. Your bid will be high enough to win in the bidding system.
According to Facebook, you’re “often charged less than your bid.” Remember not to bid too much as the results wouldn’t be worth what it actually cost you. This way, you might have negative campaign ROI and lose money instead of winning.
- Relevance score. Your ads’ relevance score will directly affect the cost of your ad results and how Facebook prioritizes the delivery. If you have a higher relevance score, Facebook will be more likely to prioritize your ad and reduce the cost per result.
- “Estimated action rates.” Facebook determines your “estimated action rates” (which are exactly what they sound like) by a number of different factors. If their algorithm believes that the number of actions taken on your ad will be high, you’ll get a priority in the bid war.
The basic idea of Facebook’s ad auction has stayed the same over time: you bid on having an engaged audience see (or take action upon) your ads.
A number of factors contribute to whether or not your bid will “win” those views, and understanding all of the factors and how the process works can help you get the results you want.
What’s your favorite Facebook ads bidding strategy? Have you already experimented with the different types of bidding?
Let us know in the comments and remember: While the data shown in this post should apply to most of you, never assume anything. Always test everything!