We recently posted about changes that are coming to Facebook’s Ads Manager. Mainly, that Facebook is saying “Goodbye” to Power Editor, and merging all of the best Power Editor features into Ads Manager. We discussed the two major changes: (1) the ability to choose between 2 workflows, and (2) the need to review your drafted items before they go live. As these changes are rolled out gradually to advertisers, and the kinks are worked out, we anticipate seeing additional changes. Today we’re going to take a look at Facebook Ad Bidding Changes that were noticed in the new Ads Manager.
What is Facebook Ad Bidding?
There are likely hundreds, if not thousands, of businesses who have YOU in their target audience. They want to get their Ad on your timeline. But, how does Facebook decide which Ad that you see?
One element of that determination relies on Facebook’s bidding system. Every time you sign on to Facebook (or navigates to your timeline) an auction takes place in a super-fast micro-second. Things like the Advertiser’s reputation and your typical behaviors on Facebook will narrow down the Ads you’ll likely see, as well as the BID that the advertiser has set for their Ads.
Unlike traditional auctions, the advertiser with the highest bid will NOT necessarily win the spot in your timeline. Rather, Facebook will look ad the bid, as well as elements related to the Advertiser, and Your likelihood to act on the Ad to make a complex determination. Facebook’s main concern is to show the right Ad to the right person at the right time – not just make more money. That being said, if your bid is too low, you will not have a chance at winning the auction. Understanding Bidding is essential for success as an advertiser.
The “Old” Facebook Ad Bidding Layout
Up until now, during the Ad creation process, you selected whether you wanted Automatic Bidding or Manual Bidding from the “Optimization & Delivery” section at the Ad Set level.
Automatic Bidding was “hands-off” and you would leave it to Facebook to keep you competitive in the marketplace. Facebook attempt to get you the most actions at the lowest cost. For most new advertisers, this was the best option.
Manual Bidding allowed you to set the limits for how much you were willing to pay per action. Unfortunately, I often saw advertisers misuse the Manual Bidding option because they did not truly understand how it worked cooperatively with their ads.
The “New” Facebook Ad Bidding Layout
Facebook has made some changes to the way we will select our Bid Strategy in the Ad creation process. It’s still found at the Ad Set level, and looks like the image below:
It’s a pretty significant change in verbiage and is bound to throw off advertisers when they encounter it in Ads Manager. But, in reality, not much has changed once you dive into it!
Lowest Cost Facebook Ad Bidding
Lowest Cost bidding is what was formerly known as Automatic Bidding. With Lowest Cost Bidding, you are telling Facebook that you want to get the most actions at the lowest cost. This bidding type is best for new advertisers who need to learn about their typical cost per action (CPA) on Facebook. It’s also great for advertisers who want to ensure they reach as many people as possible, and spend all of their budget efficiently. With lowest cost bidding, you may notice that costs rise as you spend more money.
Set a Bid Cap on your Facebook Ad Billing
Checking this box will allow you to take advantage of Lowest Cost Bidding, but put an upper limit on how much Facebook can bid. This is the same thing as the previous Manual Maximum Bid option. This is another area where I often see confusion and misuse. It’s important to recognize that costs for Facebook Ads will fluctuate based on the day of week, time of day, and competition in the marketplace. I rarely set a bid cap myself. At at the end of the day, one expensive outlier typically only brings the average cost up a little bit. I don’t personally want to risk missing the perfect person because they were priced a few cents more than I would prefer. Another potential issue will arise if you set your Bid Cap too low. It may limit (or stop) delivery of your Ad. I only recommend setting a Bid Cap if you are a seasoned advertiser who has a thorough understanding of what your typical CPAs are and how high you can go with your bid cap while maintaining your average costs and ad delivery.
Target Cost Facebook Ad Bidding
Target Cost bidding is similar to the previous Manual Average Bid option. This allows you to scale up your spend while maintaining a relatively consistent bid cost. Target Cost bidding is currently available for app install, conversion and product catalog sales campaigns. When you use Target Cost bidding, Facebook will work on finding bids close to your average. The first 50 or so may have significant variation as Facebook works to learn your audience and how to get you bids in your target range. Some bids will be higher, and some will be lower. The average should be close to the bid you set here, especially after the first 50 actions.
With Target Cost bidding you may not get the lowest cost. Facebook will be trying to bid at your target cost – even if less expensive bids are available. So, if your target cost is $5, Facebook will seek out results close to $5, even if lower bids are possible. One benefit includes reaching “more expensive” people deeper in your target audience. So, if you find that your targeting is accurate but you are not getting the conversions you expect, or an audience that typically performed well is not performing well anymore… you may want to consider using a higher target cost bid to reach more qualified people within your audience. If it’s more important to get the most people at the lowest cost, you should use the Lowest Cost Bidding instead.
It’s important to keep in mind, that if your Target Cost Bid is too low, you may not spend your full budget and your delivery may even stop. Similarly to a Bid Cap, I do not recommend Target Cost bidding unless you are an experienced advertiser who has a thorough understanding of bidding as it relates to your business and your target audience.
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Meg is the Founder and CEO of EIEIO Marketing. Originally from Rochester, NY, she now lives in Phoenix, AZ with her husband and their 4 daughters. Meg has been involved with marketing to moms for over 7 years. She also worked for Facebook within their Marketing Expert Program. When Meg is not managing ads for clients, teaching digital marketing strategy, or furthering her own professional development – she enjoys getting the family out of the house to explore a variety of fun and educational adventures. After the kids are in bed, Meg enjoys binge watching Netflix, fantasy football, and a glass of wine. Learn more about EIEIO Marketing.