In early 2018, digital ad spend managed to eclipse that of TV. In the next two years, it is predicted that digital ads will make up 50% of all ad spend. This alone, makes it clear why it is so important to know how to optimise your bidding strategy and budgets on Facebook!
Mastering the art of creating unique ad designs and creative that triggers a desire to purchase in any customer is just the tip of the iceberg.
You also need to know how to target the right Facebook audience and optimise your bidding and budgets to increase Facebook ROI.
What’s the point of having a great ad and a carefully selected audience if your bidding strategy is wrong?
Such a mistake could result in over-paying for your campaign, reaching only a small portion of your potential reach and limiting your ROI.
To begin with, let’s do a little recap of how bidding works on Facebook.
Did You Know?
- Facebook bidding is a worldwide auction, where advertisers compete for Facebook’s precious Real Estate: Newsfeed, Messenger, Audience Network and Mobile Apps.
- Even if you are bidding a high amount, you will still end up paying the lowest amount possible in the auction to get your ads delivered.
- The relevance score of your ads will directly affect the results of the auction. This is calculated by weighing the positive interaction with your ad (likes, shares, clicks) against negative interactions (users hiding the ads). Careful targeting and relevant ads will help maintain a healthy relevance score.
- The estimated action rate (yes, it is exactly what it sounds like) also affects the results of the bidding auction. It’s calculated by analysing you potential customers’ previous actions as well as your historical ad data.
There was a time, not long ago, when life as an advertiser was simple and straightforward-or so they say. They were known as the times when you could only bid by Clicks or Impressions.
Facebook now offers the following bidding principles:
- CPM Bidding – The most unpredictable bidding method. We would recommend using CPM bidding only if you are not looking for specific results, but instead just want to create brand awareness.
- CPC Bidding – You will pay for every link click your ad gets (i.e. CTA clicks or clicks to install an app). When using this bidding principle keep in mind that if your relevance score is low, Facebook will stop delivering it. The secret here is to have a high CTR-which in turn means a low CPC. Facebook would much rather have a £0.1 ad that gets clicked 1000 times than a £3 ad that gets clicked once. Remember that this type of bidding is only available for a few objectives on Facebook.
When using Conversion Optimisation make sure to have the Facebook Pixel installed or you will not be able to see your results.
So, now that we’ve established how bidding works and what principles you can choose from, it’s time to talk about strategy.
In short, bid strategies are cost control tools. They are there to help control your cost per optimization event in the same way budgets help control your overall spend.
The two bidding strategies available to choose from on Facebook are focused on efficiency and stability.
Bid Strategies to get the most from your Facebook campaigns
- Lowest Cost Bid – Yes, you got it right. This bid strategy tells Facebook to aim for the lowest possible cost per optimisation event. It also allows you to set a “bid cap” to define the maximum amount of your bid. Using the bid cap option can be particularly helpful if you are on a tight budget.
- Target Cost Bid – This strategy is available only for campaigns using the lead generation, app installs, conversions or catalogue sales objectives. It is very useful if your goal is to get conversions and you have a flexible or larger budget.
A very important step when choosing a bid strategy on Facebook is your ad delivery schedule.
There are two delivery options on Facebook: Standard and Accelerated.
Standard delivery tells Facebook to pace out your ad placements in order to let your campaigns run as evenly as possible (this is called pacing).
This can be determined either through your scheduled campaign dates, or what Facebook feels is a reasonable amount of time, based on your budget.
We recommend using Accelerated delivery only if you are in a rush with your campaign (say, for example, two weeks before Christmas). This delivery type gets you as many placements as possible in a narrow time-frame.
Pair standard delivery with a bid cap to ensure that you will never go over the highest bid you are willing to spend and limit risk of over.
Choosing a budget that matches your business objectives
Facebook gives you the option of choosing between a daily budget or a lifetime budget (amount to spend over the duration of your campaign).
As every campaign is different, there is no recommended amount as to how much you should spend on your Facebook ads.
The daily budget represents the average amount of money you are willing to spend in a day. This option allows Facebook the leeway to Optimise spend based on the opportunities available to get you the results you are after.
In that instance, Facebook can end up spending as much as 25% over your daily budget!
If you are not comfortable with this, choosing a lifetime budget is the way to go. Lifetime budgets are best paired with a standard delivery type as this tells Facebook to pace your budget evenly over the duration of your campaign.
However, Facebook’s algorithm might still decide to spend more or less depending on the opportunities available to deliver you results.
Prices in Facebook’s auction fluctuate due to competition on the platform. To avoid wasting the whole budget suddenly, Facebook uses its pacing mechanism to ensure control of ad spend and a smooth delivery.
When using a lifetime budget, pacing allows you to allocate a campaign budget evenly over multiple days. Its goal is to avoid over or under-delivery.
Remember, you should have a very good idea of what your ideal budget should be ahead of starting your campaigns. Changing the budget after you go live will affect your ad performance as Facebook will need to re-learn how to get the most out of the new amount.
Now that you understand how bidding works and what options you have available at your fingertips, it’s time to get down to the nitty-gritty of how best to optimise your bid and budget.
We’ve put together a list of best optimising practices that will give you maximum results.
Optimise for conversions
Optimising your Facebook ads for conversions is the best way to ensure maximum results.
By using this method Facebook will deliver your ads only to people who are most likely to convert, getting you the most results at the lowest cost.
But, as with everything we’ve talked about before, it depends on what your campaign goals are.
Luckily, Facebook has a plethora of optimising objectives to choose from (e.g. post engagement, link clicks, leads, landing page views, brand awareness).
Bid the maximum a conversion is worth to you
As mentioned before, a bid cap is a very good way to ensure you don’t spend more than you can afford.
We recommend setting the bid cap equal to the maximum amount that a conversion is worth to you.
Start with a small daily budget
If you are not certain whether a campaign will deliver the expected results, we recommend using a small daily budget (£25 for example) and then analyse your campaigns over a two-week period.
If your campaign is doing well then you can go back and increase spending. This way you will avoid wasting money on campaigns that do not deliver.
Leave room for Facebook’s optimisation algorithms
Facebook’s pacing mechanism helps deliver your ads in the ever-changing market environment that is the Facebook auction.
Let’s say your campaign starts running at a time when opportunities are more expensive due to increased auction competition.
Using the pacing mechanism, Facebook is able to optimise your bid and budget so that you get the best results regardless of the market environment.
Yes, this can mean you’ll end up paying more one day. But, it also means you’ll be paying less on a day when performance is likely to be lower.
At the end of the day, every campaign is different and thus, optimising your bid and budget will always depend on your goals and expected results.
But, if you keep the information we went through together in mind, you will have an easier time choosing the bidding strategy and optimisation event that will make your campaign the star of the show.