Editor’s Note: This post has been updated with new links and content to reflect 2019 updates to Facebook Ad Manager.
Original Publication Date: March 9, 2017
Facebook ads bidding contributes to the method and pace at which your ads get delivered to your target audience, and what you’ll pay for each click and conversion.
While Facebook ad bidding isn’t as glamorous as betting at a Casino Royale roulette table…
…it still has some excitement to it.
As someone who has run tons of Facebook campaigns, I can tell that it may get addictive pretty quickly. So, how can you avoid gambling with your ad budgets while getting maximum results?
Up next, you’ll find 54 tips, hacks, and shortcuts to bid your way to the optimal Facebook campaign results.
Why Do You Need Custom Facebook Ads Bidding?
Why couldn’t you just use the standard Facebook ads bidding that’s automatically set by Facebook for every campaign you create?
Well, you could, and you’ll probably get decent ad campaign results — but there’s a huge potential waiting to be untapped with custom ad bidding.
AdEspresso ran a Facebook ad bidding experiment where they tested four different bidding methods: Cost Per Click, Cost Per Mile, Optimized Cost Per Mile, and Cost Per Acquisition.
The results were pretty staggering — the differences in the ad groups’ reach, impression count, and CPC varied by more than 3,000%.
While this was only a small experiment with a fairly low budget, it illustrates perfectly the importance of expert Facebook ad bidding.
While it’s crucial to nail your Facebook ad design and copywriting, the ad bidding will decide three important aspects of your campaign:
- How many people will see your ad?
- How many times will a person see your ads?
- At what cost will your ads be delivered?
How Facebook Ad Bidding Works
Facebook ad bidding operates like an auction (much like bidding in Google Ads). With millions of advertisers trying to reach billions of potential buyers, Facebook’s unable to deliver all the ads and keep everyone happy.
When there are too many advertisers competing for the attention of the same people, the highest bidders will get most of the ad impressions. However, having the highest bids doesn’t always guarantee that your ads will get delivered.
Let me explain.
Facebook’s ad deliveries are guided by two main goals:
- Creating value for advertisers by helping them reach and get results from people in their target audiences
- Providing positive, relevant experiences for people using Facebook, Instagram or Audience Network
Unlike in a traditional auction, the winner isn’t the ad with the highest monetary bid, but the ad that creates the most overall value based on three different criteria.
Facebook’s Three Factors To Determine Ad Auction Winners
Advertiser bid: The amount of money you bid on an ad group. Ad bids can be automatic or manual.
Ad quality & relevance: Facebook will evaluate how interested a person will be in seeing your ad. For that, it measures the ad’s quality and relevance. According to Facebook, if your ad has got lots of negative feedback, it may decrease the ad’s total value. If the person has a history of being interested in what you’re advertising, this could increase the total value.
To get a glimpse of how users are reacting to your ad, you can check its relevance score. The relevance score is a 1-10 numeric value that helps to estimate how well your ad is resonating with the audience associated.
Estimated action rates: The estimated action rate is a Facebook’s calculated measure of how likely a person is to take the actions required to achieve the result you’ve optimized for. The estimates are based on the previous actions of the person eligible to see your ad and your ad’s previous performance. Facebook needs at least a few results per day to be able to estimate your campaigns’ action rates.
When an auction occurs, Facebook will standardize the factors and combine them into a total value. The ad with the highest total value wins and gets delivered to people’s newsfeeds.
How Does Facebook Charge You?
So your Facebook ad had the highest bid and relevance score compared to the competition. How will you be charged for the ad delivery?
It’s a bit complicated, so let’s look at an example. Imagine you set a bid to pay $20 for 1,000 ad impressions (That’s Cost Per Mile bidding, which we’ll get to soon). Are you going to be charged $20 for every 1,000 impressions, even if you could surpass your competition at a lower budget?
The answer is “No”.
One of the benefits of Facebook ads bidding is that there’s no danger of bidding too much. This means two things:
- You’ll often be charged for less than your initial ad bid.
- Even if you bid a lot more than you had to, Facebook will only charge you for the amount necessary to surpass the competition.
Facebook expert Jon Loomer ran a Facebook ad bidding experiment to test these rules.
He created three ad groups with different CPM / Cost Per Mile bids:
- Desktop News Feed: $20
- Desktop Right Column: $10
- Mobile: $20
What he actually paid for 1k impressions in each ad set was:
- Desktop News Feed: $9.48
- Desktop Right Column: $1.48
- Mobile: $9.63
As you can see, it makes sense to place higher Facebook ad bids if you can afford it, as you’ll only be charged for the minimum amount it takes to deliver your ads.
Getting Started with Facebook Ad Bidding
The best time to set up your ad campaign’s budget and bids is during the setup phase.
To customize your ad budget, go to the Budget & Schedule section.
This is where you choose between daily and lifetime ad budget.
Daily budget: How much Facebook will spend on delivering your ads every day during your campaign’s set dates.
When you set your daily budget, you’re setting an average. This means that Facebook will try to get you roughly your daily budget’s worth of the results for every campaign day.
However, on certain days when Facebook sees better opportunities, it may spend up to 25% more than your daily budget.
So your daily ad spend could look something like this:
Lifetime Budget: That’s the amount you’re willing to spend over the duration of an ad set.
Tip: You can’t switch an ad set’s budget type after the ad set has been created. But if you want to switch your ad budget from daily budget to lifetime budget, you can duplicate an existing ad set and change its budgeting method.
To choose your preferred ad delivery options and set custom ad bids, scroll down to the Optimization & Delivery section.
Here you can set all the manual bids and choose how you want to optimize your ad delivery.
2019 UPDATE: Cost Cap Bidding
In April 2019, Facebook announced expanded options for bid strategies based on requests from advertisers who wanted to drive volume and control costs. This option, called Cost Cap bidding, lets you set a max CPA/CPI and drive results “at or below your set maximum cost per optimization event.”
The expanded bidding options were rolled out around the same time that Facebook overhauled the Ads Manager interface, adding features like auto-naming campaigns and the ability to copy-and-paste while you build ads to save time.
The interface supports the new bidding option with an updated experience that guides you through the process of choosing the right bid strategy and control, so you’re more likely to maximize your ad spend without sacrificing results.
Facebook Ad Delivery & Optimization
Depending on your ad campaign’s goals, you can choose between multiple optimization methods.
Your Facebook campaign objective determines what optimization and bidding options you’ll have.
Depending on the Facebook campaign objective you choose, you’ll get a different set of options that are best suited to that goal.
As you create a new Facebook ad campaign, you can choose between plenty of campaign objectives (and each of these has different delivery and bidding options).
Below is a list of possible ad delivery optimization options for popular Facebook campaign objectives. Put plainly, the campaign objective equals your desired advertising result.
Campaign Objective: Conversions
- Link Clicks
- Daily Unique Reach
Campaign Objective: Traffic
- Link Clicks
- Daily Unique Reach
Campaign Objective: Post Engagement
- Post Engagement
- Daily Unique Reach
Campaign Objective: Brand Awareness
- Brand Awareness
Campaign Objective: Lead Generation
- Link Clicks
Campaign Objective: App Installs
- App Installs
- Link Clicks
- App Events
- Video Views
Campaign Objective: Video Views
- Video Views
- Daily Unique Reach
Campaign Objective: Reach
As you can see, your Facebook ad delivery options depend on the campaign objective.
Ad Delivery Optimization Best Practices
When confronted with four different ad delivery options, it’s pretty easy to get confused.
There’s a lot at stake, including your ad campaign’s reach and the cost per result.
So how can you make the right ad delivery choice?
Here’s what Facebook says:
Your optimization choice tells us what to value when delivering your ad. For example, you could tell us to show your ad to the people in your target audience most likely to click a link to your website (optimizing for link clicks) or to show it as many times as possible (optimizing for impressions).
If you have optimized your campaign for conversions, for example, Facebook will deliver your ads to the people who are most likely to convert after seeing your ad. Remember to have a Facebook Pixel in place if your goal is website conversions, as Facebook needs the data for optimization.
Whenever you optimize your ad delivery for impressions, Facebook will do its best to deliver your ad to the maximum number of people for as many times as possible for your set ad budget.
The best practice is to choose a campaign objective that’s closest to your goal:
- If you want people to convert on your website, choose the Conversions objective.
- If you want people to install your app, choose the App Install objective.
- To collect new leads, choose the Conversions or Leads objective.
- If you want people to download your eBook and become leads, choose the objective of Lead Generation.
However, it might be worth creating two separate ad sets to A/B test various bidding methods. Different ad delivery methods can provide differing results.
Facebook Ad Bidding Options Explained
Facebook shows your ads to different audience members depending on your chosen campaign objective.
When you bid on conversions, Facebook will deliver your ads to the people who are the most likely to convert. Use this method if your goal is to increase sales, get people to fill in forms, or make a purchase.
Depending on your campaign objective, Conversions might also be named Leads or App Installs.
As you bid on Post Engagement, Facebook will show your ad to the people who might like, comment, or share your ad or your promoted Facebook post.
Facebook will deliver your ads to as many people as many times as possible while staying within the limits of your ad budget. There will be no optimization regarding who is more likely to engage with your ad.
If your goal is to drive traffic to your landing pages, app download page or Facebook Page, you can optimize your ad delivery for Link Clicks. Facebook will deliver your ads to the people most likely to click on your ad. You will be charged every time someone clicks on your ad.
Daily Unique Reach
Facebook will deliver the ads in your ad set to people up to once per day. Use the Daily Unique Reach bidding method when creating remarketing campaigns with Facebook Custom Audiences.
Facebook will serve your ads to the people who are most likely to be interested in your brand and offer. You will be charged on the basis of CPM — you’ll pay for every 1,000 ad impressions.
As AdEspresso’s experiment shows, your choice of ad optimization can directly impact your ad costs.
If your ad is optimized for conversions, for example, Facebook might only show it to the 10,000 people most likely to convert out of an audience of 300,000. For impression-oriented optimization, however, Facebook may deliver your ads to 200,000 people, but they’re not as likely to convert.
In addition to Facebook ad bidding, remember that there are other elements that affect your Cost Per Result (e.g. the audience you’re targeting).
Manual vs. Automatic Bidding
After you’ve chosen a delivery optimization method, you’ll have to choose between automatic and manual bidding.
Automatic bidding: If you’re unsure which bids to use, you can let Facebook set the bid to help you get the most link clicks at the best price.
Manual bidding: This option allows you to set a bid based on what the conversion is worth for you.
For example, when optimizing your ad set for Link Clicks, you can set the highest price per click you’re willing to pay.
If your ad set is optimized for Conversions, Facebook will give you two manual bidding options: Maximum and Average bid.
So what’s the difference between these two options?
If you set an Average bid, Facebook will use the Pacing method to optimize your bid for the best results.
As explained by Smartly.io:
Without pacing, the ad set would spend the whole budget at the beginning of the day for more expensive ads and miss the better opportunities at the end of the day. The Pacing algorithm learns the optimal bid over time.
Here’s a top-notch chart by Smartly.io that explains when to use the Maximum or Average bids:
As you can see, testing either Average or Maximum manual bids can bring great results. If your goal is to max out on conversions, it might make more sense to place an Average bid.
Using Facebook’s Suggested Bids
Whenever you choose the Manual ad bidding method, Facebook will show you suggested bids and a bid range to help you set up your bid.
Suggested bids are the sum that Facebook considers to be sufficient for your ad set to reach a significant portion of your target audience and get you the results you want.
You can see the bid range in the parentheses next to the suggested bid. This is a spectrum of bids that are currently winning auctions to reach the same audience you’re targeting.
Tip: Always change the Facebook’s pre-set manual bid in the custom bidding box. For example, if Facebook first suggests that you bid €2.20 per 1k impressions and the bid range is (€0.60–€1.33), you could bid €1.00 or even €0.61.
When you optimize your ad delivery for Reach (available when the ad campaign’s objective is set to Reach or Brand Awareness), you’ll have the additional option to set a frequency cap.
Ad Fatigue: Since the same people see the same ad over multiple days, their engagement with that ad is likely to drop, leading to higher costs for the advertiser.
Audience Decay: When you’re targeting the same people over time, their interest in your message usually decreases.
When to use the Reach objective and frequency capping:
- Use the Reach objective if your goal is to deliver ads to a niche group of people (e.g. a remarketing audience).
- Cap your ads’ frequency to 3-4 days to avoid your target audience getting bored of seeing your ads.
How to Choose Your Facebook Ad Bids
Now that you’ve got an overview of various ad bidding methods and delivery optimization rules, it’s time to talk about their real-life use cases.
When and where should you use these Facebook bidding options?
Optimize for Goals:
When you’re just starting out with Facebook ads, it might be a good idea to optimize your ads for goals/conversions.
If you’re targeting large audiences, optimize your ads for conversions so that Facebook will deliver your ads to high-potential prospects in your target audience.
Use cases: Getting people to subscribe to your service or purchase your product, getting people to fill in a lead form, etc.
Optimize for Impressions:
If your goal is to show your ad to as many people as possible, optimize for impressions. This can work for awareness campaigns and highly engaging blog content.
It often makes more sense, however, to optimize for more specific goals that benefit from Facebook’s auto-optimization.
When optimizing ad delivery for impressions, be careful not to set a huge campaign budget. Keep your daily ad budget fairly low to create an artificial frequency cap — in other words, to keep Facebook from delivering your ad to the same person 10 times per day.
Use cases: Promoting a limited-time offer, promoting highly engaging blog content with the potential of going viral, or targeting a niche audience with a highly specific offer.
Optimize for Daily Unique Reach:
There are times when it makes sense to deliver your ad to people once per day over a longer period of time, such as a remarketing campaign.
Keep your eye on the ad frequency and campaign performance to track when people start to get tired of seeing your ads and stop engaging with the campaign.
Use cases: Remarketing campaigns, targeting Facebook Custom Audiences, or marketing to existing leads.
Optimize for Link Clicks:
If your goal is to drive traffic to your website or Facebook page, optimizing ad delivery for clicks could be a smart move.
For example, when promoting blog articles on Facebook, it may make sense to optimize your ad set for Link Clicks, so that the maximum number of people will click on the ad and visit your blog.
For (another) example, if we were going to promote this post on Facebook ad examples, we could optimize the ads for either Post Engagement or Link Clicks.
Use cases: Promoting blog content to drive traffic to your website or app download page.
Tip: If your goal isn’t to get people on your website but for them to take a specific action on your site, optimize for conversions rather than clicks.
Every ad delivery optimization option will have a different predicted reach.
For example, for a daily budget of €30, one could get reach 1,700 – 4,400 people out of 100,000 when optimizing ad delivery for Impressions.
Or reach 3,800 – 9,900 people when optimizing the ad delivery for Conversions.
Your choice of Facebook ad bidding has a tremendous effect on your campaign’s reach, CPC, and CPA.
The more Facebook campaigns you run, the better feeling of the average ad costs you’ll get. Start with Facebook auto-optimization, learn from the results, and experiment with manual ad bidding.
The best way to learn about ad bidding methods and how they work is to run a few A/B tests based on your previous learnings (and read this guide, of course!)
If you’ve learned Facebook ad bidding hacks over time, we’d be thrilled to hear about them. Do not hesitate to leave a comment!