In this article series I’m covering the ABC’s of Profitable Facebook Advertising. Part 1 covered Facebook Audiences, Part 2 focuses on Bidding.
You might have some knowledge of traditional pay-per-click bidding, but you should know it’s quite a bit different. It’s more similar to traditional display advertising where costs are based on CPM (Cost per 1000 impressions).
In traditional pay-per-click, you give the ad platform a cost that you are willing to pay for a click or a conversion. With Facebook, you actually provide them a result or action you want to optimize for. For instance, you can optimize for Traffic, Leads, Purchases, App Installs, and many more.
First you provide Facebook with a budget you are willing to pay for a set time period. Then, you can ask Facebook to give you the most actions or best results for your budget.
You can choose Lowest Cost Method, Max Cost Method, or Average Cost Method.
Most advertisers should use Lowest Cost because it’s the most efficient method for Facebook to deliver to you as many actions as possible for the least amount of money. However, Facebook gives you additional control by offering you the ability to pay a maximum cost or average cost for your action.
For instance, if you absolutely don’t want to pay more than $20 per lead, you can give Facebook this max cost and it will provide leads at no more than $20 per lead. A word of warning: this isn’t a magic setting! By giving Facebook a maximum bid, you are potentially severely limiting the number of impressions your ad will get and you may find it’s difficult to get enough traffic and conversions for your budget.
With average cost, you can potentially get more leads that hover around $20 (some will be more, some will be less) but again, you are potentially limiting Facebook’s ability to reach enough people.
Therefore, I recommend that most advertisers use the Lowest Cost setting and then carefully monitor your actual cost per action/result and make changes to your campaign if you see the costs fall outside your comfort zone.
One additional note—I have also learned something very important after billions of impressions for my ads. Facebook is excellent at giving you what you ask for.
That means, if you want Purchases of a product, then you should run a campaign that optimizes for Purchases and don’t run a Traffic campaign and hope to get the most purchases!
Remember, Facebook has millions of data points on every user from what they input and consume on the platform. It also has a record of how their users behave on websites outside of Facebook where their Pixel is installed (and that Pixel is installed on a majority of the websites you visit every day!)
It stands to reason that they know people that love to click on things and they also know people that love to buy things. The profile of a “clicker” isn’t the same as the profile of a “buyer.” Therefore, always optimize your campaign for the action you need your prospects to take.
If you need help with Bidding or Campaign strategies, please reach out to us below.