Facebook Ads bidding plays an important role in your overall Facebook advertising strategy. The right ad bidding strategy is necessary to make your ad campaign a success. Without it, you could lose money on your campaigns even if your advertising and audience-targeting content are on the right track. Using the wrong bidding strategy can lead to overpaying for conversions or ads not delivering due to bidding too low. In this article, let’s discuss how Facebook ad bidding works and what is the best bidding strategy to use.

Facebook Ads Bidding

When you choose a Facebook Ads bidding strategy, you’re choosing how you want Facebook’s algorithm to bid for you in ad auctions. That is, when you place a campaign, you want to compete in an auction to ensure that your ad is shown to the right people at the right time, according to your budget and business goals.

Whenever there’s an opportunity to show someone an ad, any advertiser with that individual in their Facebook ad targeting can enter the auction. This is often why costs are much higher for smaller audiences because competition is higher. Competition is also higher during the holiday season, which is why the overall cost of advertising during this time also increases.

According to Meta, “To ensure that ads maximize value for both users and businesses, the auction winner is the ad with the highest total value.” “Total Value” consists of three main components:

• Facebook Ads Bid:  Simply put, a bid is an amount you are willing to pay to get the desired advertising results.
• Estimated action rate: Estimates whether a particular user interacted with or converted from a particular ad. Basically, the probability that showing a particular ad will get the desired result from the user.
• Ad Quality: Measures user feedback and other advertising attributes such as information retention and “interaction bait”.

3 Facebook Ads Bidding Strategies

Spend-Based Facebook Ads Bidding Strategy

Spend-based bidding is the simplest and often defaults when you choose a campaign objective. The basic premise of this bidding structure is: “focus on spending your entire budget and getting as many results or value as possible.”

Delivery is maximized for conversions with the budget you specify. Basically, you ask Facebook to give you the most results with a specific amount of budget to be spent. This is similar to Maximize Clicks bidding in Google Ads.

This strategy is best for people who want to spend their entire budget and don’t have a specific cost-per-action (CPA) or return on ad spend (ROAS) goal. If auction competition decreases, your CPA may drop, but if that competition increases, your CPA may increase.

This strategy focuses more on eCommerce/ROAS as it spends your budget but focuses on the highest value purchases or conversions. While this strategy will help you spend your entire budget and get higher quality conversions, keep in mind that you’ll need to set up conversion tracking as well as specify conversion values in exchange for your service.

Goal-based Facebook ad bidding strategy

Goal-based bidding allows you to set the cost or value you want to achieve. As the name implies, this bidding strategy aims to maintain an average cost per result that you specify. This is useful if you understand the maximum cost-per-conversion or outcome you can expect to pay while maintaining your ad profits. Remember that the cost you specify is what Facebook will try to average over the duration of the campaign. This means that your cost-per-result may be less than that value one day or exceed it the next. Also, if you set your budget too low, it may take Facebook longer to spend your budget and get out of the learning stage. It wasn’t until Facebook finished its learning phase that it could really begin to optimize ad delivery. Until then, there will be fluctuations in cost and performance. This strategy is best if you have a clear idea of ​​your average CPA. If you’re not sure, try bidding on the largest amount for a short time to get a base.

Return on ad spend is a popular Facebook ad bidding strategy for people whose conversions drive direct revenue. E-commerce businesses often gravitate towards this strategy as it is a means to ensure that their advertising remains profitable as the goal is directly tied to sales. For those who are getting conversions that aren’t directly leading to monetization, this strategy is less popular because it can be difficult to assign a conversion value.

Manual Facebook Ads bidding

Manual bidding allows you to control how much you want to bid in ad auctions. This bidding strategy allows you to set the maximum bid for your ad in auctions. This is in contrast to allowing Facebook to dynamically bid you against other advertisers. You’ll choose this bid strategy if you have a good understanding of your Facebook advertising costs, trust your conversion rates, and your ability to calculate the right bids.

When it comes to Facebook ad bidding strategies, everyone should use the least complicated approach. The biggest factor when choosing a Facebook bidding strategy revolves around your business type and the specific types of goals and conversions you want to maximize across the entire platform.