Since real time auctions are in the core of most online advertising channels like Facebook, bidding is one of the cornerstones in managing advertising performance. Unlike many other channels, Facebook has built advanced bid optimization algorithms, which often provide excellent results without complex optimization work. However, even with all the ease of use, achieving best results requires understanding how the bidding system behaves and how you as an advertiser should control it.
Our customer support is regularly contacted about bidding challenges. We wanted to share our knowledge of these challenges so that you can learn to avoid those in the first place and focus on enjoying superb advertising results.
Tip #1: Match the bid type to your advertising goal and transaction volume
The key point is to tell Facebook bidding algorithm your target action and make sure it gets enough daily conversions on ad set level, so that the conversion rate does not fluctuate too much. A minimum of 20 daily conversions should be enough for the algorithm. If the amount of daily conversions is too low, the algorithm may not work properly, providing bad results and decreasing the amount of impressions delivered.
You can increase the amount of conversions reported to the algorithm by moving your target action towards the upper end of the conversion funnel, where more users are taking action. For example, an ecommerce store could change the target action from a transaction into a shopping cart visit or a landing page visit. In this case the bidding algorithm would optimize towards this earlier step instead of the true goal (transaction), but it has much more data to identify the potential clients. Subscribe to our newsletter in the footer below to hear about the upcoming blog post, which will provide more detailed instructions on how to do this.
Tip #2: Decrease your bid only if you really have to
Many advertisers intuitively try to bid as low as possible in order to achieve the lowest CPA (cost per action) possible. For Facebook lower bids mean that you are not willing to pay as much per user and the algorithm stops bidding high for the most potential users. Thus, you will only reach users less likely to convert, leading to even worse results and low delivery.
We recommend decreasing the bid only if your CPA prices are too high and you have good amount of delivery for the ad set. Even so, keep an eye on the delivery, since it might decrease sharply when your bid drops below the competitive level.
Tip #3: Intuitive or not, increasing the bid can improve results
Be bold and always bid as high as you are ready to pay per action! Due to Facebook’s auction system, you will hardly end up paying as much as you are bidding. If you try to minimize the bidding, you can end up reaching out the users that are less likely to convert, over and over again. Therefore, keep an eye on the ad frequency.
Increasing the bid lets you reach more people, meaning more conversions (sales) and more data for the bidding algorithm, which improves the results even more. As long as the average CPA remains on a good level and you have more budget to spend, increasing the bid is the way to go.
Tip #4: Don’t forget the other factors affecting the performance
In addition to your bid level and target action, Facebook’s auction system also considers other factors, which define how much you must bid compared to others in order to get impressions. A simple example: in auction for mobile newsfeed impression your 5€ CPM bid and an Ad with a 0.5% CTR might well lose to a competitor with only 3€ CPM bid, if their CTR is 2%.
Improving creative and audience quality can save you a lot of money and improve results. Look at the CTRs and relevance scores of your ads to understand if they are of high quality or not. If not, AB test to find ways to improve the creatives and audience targeting.
Bonus tip: let the bidding algorithm do the work and focus more on optimizing budgets
In general, Facebook bidding algorithms are extremely good, so why not let them do the work? We have seen that a much bigger effect on a campaign performance can be achieved by focusing on budget optimization instead of fine tuning bids. In addition, changing bids more than once a day can actually harm your ad performance, as you are mixing up the bidding algorithms at Facebook's end. Instead of thinking which bids to increase or decrease 10%, identify the best 20% of your ad sets and allocate more budget to them from the worse performing ones. And by the way, this process can be automated with our Predictive Budget Allocation feature.
Facebook® is a registered trademark of Facebook Inc.