What are the types of bidding strategies on Facebook?
Do you know all the bidding strategies available on Facebook Ads? Do you know how to optimize your business campaigns properly?
So, after reading this guide, you'll be able to consider the pros and cons of each bidding strategy and better understand how it impacts the overall performance of your campaigns.
As with Google, Facebook also allows users to choose which bidding strategy to use in their campaigns. This feature is essential for the platform to display ads to the audience that has the greatest chance of achieving the objective of their campaigns.
Before we mention the available strategies, it's important to know that the way you organize the budget in the campaign makes a difference. If you use CBO, the bidding strategy is defined at campaign level. If not, it is defined at ad group level.
Now that you know where to set your bidding strategy, you're ready to get to know them. Facebook Ads offers three types of bid, which are: based on spending, based on goals e manual.
Shall we find out more about each of them?
Bidding on Facebook Ads: Why does your choice matter?
Facebook's bidding strategies allow us to choose to achieve the commercial objectives you have set for yourself, whether it's increasing your sales, bringing more traffic to your website, winning new customers and keeping them loyal, or expanding your brand. In this other article, you can see all the types of campaigns available on Facebook/Instagram.
Depending on your strategy, it's important to know how to choose a bidding method that fits in with your business's KPIs, i.e. making it measurable and allowing you to monitor and optimize it.
By choosing well, you can maximize your investment, efficiently scale your campaigns and bring in an ROAS that makes sense for your business today. In other words, maximizing your profitability.
How to evaluate the best strategy?
To choose the best Facebook Ads bidding strategy, you need to understand what your business's main objective is, so that you can identify what your main objective is in the specific campaign. You will then discover your business's main KPI.
It's important to remember that your business can (and usually does) have campaigns with different objectives, in order to cover all the stages of your customer's conversion journey.
Let's look at an example: Maria, is a supplier of printed t-shirts and wants to increase her sales in her e-commerce. In other words, her main objective here is to generate conversions into purchases on the site. If she wants to keep costs down, the main KPI will be cost per purchase, or CPA. However, if your goal is to maximize the value of purchases (revenue), your main KPI will be ROAS. In the end, the KPI is what will define the best strategy for Maria.
NOTE: The CPA strategy is best suited to Leads or when the price of the product doesn't vary much. Otherwise, a focus on ROAS is best.
What bids are and how they are classified
A bid is how much you are willing to pay/invest in the Facebook Ads auction to achieve the desired result with your target audience. The bid is not is the cost of your optimization event chosen when creating your campaigns.
Facebook Ads has three types of bid: spend-based, goal-based and manual.
Expense-Based Bidding
In this bidding strategy, the Facebook Ads platform tries to consume all of your budget and get as many conversions or conversion value (revenue) as possible.
There are two options for this strategy:
Lowest Cost:
With this strategy, you'll get Facebook to look for the highest number of conversions, without worrying about their value
Higher value:
In this strategy, the idea is for conversions to be focused on a higher value. For example, if your business is e-commerce, the aim is to advertise to the public that tends to consume the largest number of products with the highest values.
This option is advisable for obtaining the highest possible volume of results and not having strict CPA requirements, when spending the entire budget is a high priority and an ideal strategy when advertisers don't have a clear KPI or objective in mind.
A few caveats: higher CPM and CPA costs may arise, be aware of what you are willing to tolerate.
Goal-based bidding
In this strategy you will define how much you want to pay for a conversion or the return you want to get. These are the options available:
1. cost limit:
Using this strategy, you set a limit value for each conversion. For example, if you want to capture leads, you can define how much you want to pay for each one. This option is advisable if you want to keep your CPA at or below predetermined levels, regardless of market variations.
A few caveatsIn this choice of bids, spending can be lower than using the lowest cost. If your CPA goals aren't strict and you care more about spending your budget, try the lowest cost.
It's important to remember that campaigns can take longer to emerge from learning than if other strategies are used. During this period, costs may exceed their limit. However, advertising should stabilize after this phase.
2. Minimum ROAS (Return on Investment in Ads):
Working on the minimum ROAS, you define how much you want to get back from that campaign. For example. If you want to spend R$ 500.00 on the campaign, and have at least R$ 550.00 in purchases, set the ROAS control to 1,100.
This option is advisable to maintain a balance between investing in advertising and getting a return. Here you have more control over the purchase value of what you generate from ads than over the highest bid.
A few caveats: If Facebook can't reach its minimum ROAS threshold, the ad may be stopped. If spending is more important than generating a specific ROAS, consider using the highest bid.
Note: By using goal-based bidding strategies, you run the risk of not consuming all the budget allocated to the campaign.
Manual launch
Finally, the last strategy is manual bidding, where you control how much you are willing to bid in ad auctions. There is only one option, which is as follows:
- Bid Limit: With the bid limit, you will set the maximum bid to be offered in auctions, preventing Facebook from automatically bidding according to the available budget. This option is advisable for advertisers who use internal bids or LTV models. This option helps control the amount Facebook can bid in auctions.
Note: It does not control the CPA observed in the reports and requires frequent changes.
Conclusion
In this article we learned that there is no one right bidding strategy for all campaigns. This will depend on your objective with each one.
An important tip: if your campaign has no history, give the platform the freedom to get to know your audience, so it can learn about the potential cost or return of your audience.
Want to know more about how bidding strategies can improve the performance of your campaigns? Then get in touch with our teamand we'll tell you how to apply the strategies to your campaigns.
Take the opportunity to check out these other articles we've put together for you:
5 Best Practices for Facebook Audiences
Make it easier to manage Google Ads and Facebook Ads budgets with AI
