Bid strategy in Facebook ads: lower cost or desired cost?

Those who work with Facebook ads will have realized that conversion costs can often not be stable, especially when trying to scale campaigns by increasing the budget. It happens that along with the budget the costs also increase and that in general the continuous fluctuations make the results unstable.

It also happens that the costs per share are higher than the maximums that in our funnel we can afford, after having calculated or estimated the acquisition value in each phase.

See also: What is the right offer to acquire a customer? Here's how to calculate it

By making best use of the lower cost and desired cost strategies , these problems can be solved.

What are the bid strategies?

Facebook distributes the ads on the basis of an auction mechanism among the various advertisers. How much you spend to reach a user depends, at least in part, on the offer that has been made.

The bid strategies manage this auction in the most optimal way, depending on the date setting. The most common is that of lower cost with "automatic setting" or with "supply limit", to minimize costs , but it is also good to consider the desired cost strategy , which promises to keep the cost per conversion stable at increasing of the budget.

These are two options that work very differently. Let's see them in detail.

Lower cost with automatic offer

With the cost strategy lower than automatic bidding, where you do not set a bid limit by ticking the appropriate box, Facebook will try to get the lowest possible conversion cost by spending the entire budget. It will obviously do so on the basis of the conversion that we have indicated as the target of the campaign and as an optimization for the publication of the advertisement.

 

The main benefit of this strategy is efficiency , because the algorithm will try to distribute the ads by winning only the most convenient auctions, investing the available budget in the best way and then obtaining the lowest possible cost per conversion.

The main disadvantage, however, is that the achievement of these low costs may be short-lived , increasing as a result of increased competition or investment in terms of budget.

Moreover, with the automatic offer you do not have a cost control that, despite Facebook's efforts, could prove to be higher than those that the business, and the related acquisition funnel, can support.

Lower cost with limit to the offer

To have precise control over conversion costs, you can set a bid limit so that it is never exceeded.

In this way, the algorithm, knowing the value of the conversion, will stop spending budget and distribute the ads where it detects that it can not reach the goal, ie to get conversions that fall within that cost band.

If, for example, a bid limit of 4 euros is set, and Facebook is not able to get conversions below 5 euros, the campaign will stop spending budget because it will not be able to reach the given conditions the indicated goal.

Moreover, the fact of setting a limit to the offer does not mean that that will be the definitive conversion cost, or that will be higher than what would be in the automatic offer. We are always in the "lower cost" setting, so we will try to spend as little as possible maximizing the efficiency of the campaign. There will simply be a limit that can not be overcome.

If, for example, a bid limit of 4 euros is set, but Facebook, in the auction game, can spend all the budget getting a cost per conversion of € 2.50, this will be the amount that will actually be spent for every single conversion and not the one set as a limit.

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